Motor insurance paid out 59.1% of premiums in claims during 2025 - up from 54.2% the year before - the sharpest year-on-year move of any product tracked in the Financial Conduct Authority's latest general insurance value measures data, according to analysis by consultancy Broadstone. Healthcare cash plans retained the highest claims ratio of any measured product at 68.1%, but it is the motor figure that carries the greater implications for brokers and their clients.
A five-point rise in the claims ratio of the UK's largest retail motor product, in the same year that average written premiums fell around 7%, describes a market where less money is coming in and more is going out. The two movements together compress the pricing margin available to absorb further cost pressure - from repair inflation, parts costs, or the increasingly complex technology in modern vehicles. Insurance Business UK's own reporting on the same FCA dataset flagged this dynamic earlier in the year: claims costs have been rising even as premium income has fallen, driven in part by the escalating cost of repairing vehicles with advanced driver assistance systems and electric powertrains.
That structural squeeze has a renewal consequence. Insurers facing a motor book where claims already absorb 59p of every £1 in premium - before expenses - have limited room to continue absorbing cost shocks without either pushing rates back up or tightening appetite on higher-risk accounts. Fleet operators with poor claims histories, high-mileage exposure, or significant EV content in their vehicle mix should expect that dynamic to surface in renewal negotiations in the fourth quarter of 2026 and into 2027. The motor market's combined ratio has been softened by premium competition; that competition has a ceiling when the loss ratio is moving in the wrong direction.
Motor also recorded the highest claims acceptance rate of any product in the FCA data at 98.7% - a figure that is relevant for brokers whose clients have had claims declined and are considering whether to challenge that decision. In motor, a declined claim is the exception, not the rule.
Healthcare cash plans paid out 68.1% of premiums in claims in 2025, down slightly from 68.7% in 2024, and within a range the FCA has described as stable over recent years. The claims acceptance rate dipped from 92.8% to 91.1%, even as total retail premiums written grew modestly from around £427 million to more than £435 million. Kathryn Moore, senior actuarial director at Broadstone, noted that the figures reflect the practical design of these products - built to support regular, everyday costs such as dental treatment, eye care and physiotherapy rather than protection against comparatively rare events.
For brokers advising employers on employee benefits, healthcare cash plans occupy a specific niche: relatively low premium, high claims frequency, and a payout ratio that under Consumer Duty requires brokers to be able to demonstrate why the product represents fair value for the specific client group. A 68.1% claims ratio is a straightforward demonstration of value in that context. A 91.1% acceptance rate is less straightforward - brokers placing these products should understand the 8.9% of claims that do not succeed, and whether the exclusions driving those declines are clearly communicated to employees at point of sale.
Pet insurance also moved up the table, with the Covered for Life product recording 62.8% of premiums paid out in claims, up from 58.6% the year before. Across all products measured in 2025, the FCA found claims costs as a proportion of premium ranged from 17% for wedding and party insurance to 68% for healthcare cash plans.
The FCA's value measures data, now in its fourth full year, exists partly to give the regulator a cross-market view of whether products deliver value to policyholders - a question that sits directly within Consumer Duty's outcome requirements. Brokers distributing any of the products in the dataset have an obligation to be able to explain why a product's claims ratio, acceptance rate, and exclusion profile represent fair value for their specific client base. A product sitting at the lower end of the distribution - wedding insurance at 17% - requires a more considered value justification than one at the upper end. The FCA has not set a floor, but it has made clear that low claims ratios are a starting point for regulatory scrutiny, not a clean bill of health.
Moore was careful to note that claims ratios are only one measure of value and should be considered alongside acceptance rates, coverage, exclusions and customer outcomes. That caveat is itself a useful prompt: a broker's value conversation with a client is not complete until all four dimensions have been addressed, not just the headline payout ratio.
