The ABI's latest motor insurance figures highlight the continuing challenge of claims inflation despite a relatively stable premium environment.
What the data shows
UK motor insurers paid a record £3.2 billion in claims during Q2 2026, representing a 5% increase on the previous quarter and 7% year-on-year growth. Average motor claims reached £4,900, up 4% quarter-on-quarter, demonstrating that claims severity continues to rise even as insurers work to maintain competitive pricing.
Increasing costs
Although Advanced Driver Assistance Systems (ADAS) and autonomous vehicle (AV) technologies are designed to reduce collisions by preventing driver error, motor claims costs continue to rise. Insurers are seeing fewer low-speed impacts in vehicles equipped with features such as automatic emergency braking, lane-keeping assistance and adaptive cruise control, but when accidents do occur, repairs are often significantly more expensive. Modern vehicles contain multiple cameras, sensors, radar units and sophisticated electronics embedded in bumpers, windscreens and body panels, making even relatively minor damage costly to repair and recalibrate.
Labour shortages, specialist repair requirements and longer repair times are further increasing claims inflation.
Market trends
For insurers, the data reinforces several market trends:
Claims inflation remains a major profitability challenge, particularly in vehicle damage and repair claims.
Repair costs are increasingly driven by technology, not just labour and parts inflation.
Skills shortages within the repair sector and ongoing parts supply issues continue to place upward pressure on indemnity spend and claims lifecycle times.
Premium growth is not fully keeping pace with claims cost inflation, with average premiums increasing by only 1% during the quarter and remaining below Q2 2025 levels, potentially squeezing underwriting margins.
Vehicle crime and fraud reduction measures remain important priorities as insurers seek to control claims expenditure.
Conclusion
As the UK moves towards greater deployment of autonomous vehicles, insurers may ultimately benefit from lower accident frequency, but in the short to medium term they are likely to face higher average claim costs, more complex liability investigations, greater reliance on vehicle-generated data and increased demand for technical expertise to assess vehicle system performance following a collision. The transition to autonomy therefore represents both an opportunity to improve road safety and a significant claims cost challenge for the insurance market.
From a strategic perspective, insurers should continue to focus on repair network resilience, supplier partnerships, ADAS repair capabilities, fraud prevention and data-led claims management.
The ABI's support for the government's Motor Insurance Taskforce also signals increased attention on industry-wide solutions, including improving repair sector skills, increasing parts availability and addressing the affordability pressures facing motorists.
For insurers, the challenge over the next 12-24 months will be balancing customer affordability with the reality of rising claims severity driven by the increasingly sophisticated functionality of vehicles.
Speak to our Motor team to find out how we can support you.
Our motor insurance specialists advise insurers on the evolving claims and liability challenges facing the market, from rising repair costs and fraud to ADAS and autonomous vehicle technology.
