UK Car Insurance Prices - Year to Date and What’s Next for 2025

Where We Are Now

So far in 2025, the average cost of a comprehensive car insurance policy in the UK has been falling compared to last year. Across multiple market reports, premiums are tracking at their lowest levels for over two years.

The year started with noticeable drops against 2024 pricing. By spring, typical policies were over 15% cheaper than they were at the same point the year before. In pounds and pence, that’s a fall of around £140 to £160 on the average policy.

Even with these reductions, prices remain well above pre-pandemic levels - roughly a quarter higher than they were in early 2023.

Why Prices Have Been Falling

A mix of factors is behind the current softening in prices:

• The peak from 2023 has eased as some of the supply chain and repair cost pressures have levelled out

• Competitive pressures between insurers have brought rates down in certain customer segments

• Some claims cost stabilisation, although not across all areas

The Market’s Financial Position

Industry forecasts suggest motor insurers are on track to roughly break even this year - paying out about as much as they bring in. For 2026, predictions point towards a slight loss, meaning insurers are unlikely to have much margin to cut prices further without finding cost savings elsewhere.

What Could Happen in the Remainder of 2025

Looking ahead to the rest of the year:

• The recent downward trend is expected to slow

• Inflation in parts, labour and legal costs could create mild upward pressure

• Some analysts forecast small single-digit percentage increases by year-end

While large jumps in price are not expected in the short term, the direction of travel will depend on claims inflation, market competition, and any regulatory or legal changes.

In Summary

• Premiums are currently down year-on-year and at their lowest since before the major spikes of 2023

• Prices are still significantly higher than pre-pandemic norms

• Any increases later in 2025 are likely to be modest, aimed at offsetting cost pressures rather than boosting profit

The views expressed in this article are those of WHO2 Global Ltd and do not constitute professional advice. All content is for informational purposes only.