Motor insurance premiums in the UK have begun to ease after a period of steep increases, with new data showing that average costs are falling across many driver groups.

The upward pressure on claims, repair and parts costs, and inflation has not yet disappeared—but a softer market is now giving motorists a rare break.

Getting covered

According to the Association of British Insurers (ABI), the average cost of private car insurance fell to £562 in the second quarter of 2025, down from £622 in the same quarter of 2024.

That’s a reduction of £60, which in real terms (once inflation is accounted for) amounts to about an £81 cut.

The Q1 2025 cycle had already registered a 3% decline, making this the second straight quarter of easing prices.

Complementing the ABI’s figures, Compare the Market reports that its users obtained an average comprehensive cover quote of £643 in September 2025.

This aligns with the broader trend of falling costs in comparison site data.

Compare the Market also highlights how much consumers might save by switching providers: its research indicates 51% of customers could save up to £513 by comparing multiple insurers.

Who’s benefiting?

The premium reductions appear especially notable among high-risk groups.

For example:

• Young drivers have seen substantial relief.

Compare the Market data shows that 51% of 17-year-olds could receive quotes of up to £2,261.72, indicating still high absolute levels but a softening in the rate of increase.

• Drivers seeking comprehensive cover are seeing better deals.

In some cases, a complete package is now cheaper than less inclusive policies, reflecting competitive pressure across the market.

It is also interesting to note that the regions that had borne the brunt of previous rate hikes, such as metropolitan and high-theft zones, are also seeing sharper declines, as insurers attempt to regain business and manage risk more efficiently.

 

Driving the fall

Several forces appear to be combining to drive this downward movement:

Price competition among insurers is intensifying, particularly after premiums reached their peaks in late 2023 and early 2024.

Claims inflation and repair cost pressures are easing in specific segments, with parts and labour constraints less severe in many areas.

Consumer behaviour, aided by comparison platforms like Compare the Market, is putting downward pressure on pricing. More drivers are shopping around and threatening to switch providers.

Structural interventions such as the ABI’s initiatives to curb fraud, reduce theft rates, and streamline claims procedures are slowly making their mark.

However, this softening doesn’t mean that premiums have returned to 2021 or 2022 levels.

Many drivers are still paying significantly more than before the inflationary squeeze took hold.

Also, elevated claim costs, particularly with new car tech and the price of parts, especially for newer or imported vehicles, remain long-term challenges.

Process

Shop around: Use comparison services like Compare the Market to compare prices and test the market. Their data suggests many drivers could save hundreds by switching.

Evaluate coverage levels: In some cases, comprehensive policies are now more affordable than third-party equivalents.

Protect your no-claims history: Maintaining a clean record will help maximise discounts when the market softens.

Review your vehicle choice: Lower insurance group cars will benefit more from falling premiums. Comparison platforms offer tools, such as insurer group checkers, to help with decision-making.

 

Bumpy roads

The latest data, reinforced by Compare the Market’s user-based insights, indicates that motor insurance in the UK is coming off the boil.

For many motorists, the pressure is easing, which is a significant relief to motorists struggling with economic pressures as a result of the cost-of-living crisis..

However, the underlying forces that drove costs higher remain with us, and insurers will likely continue to keep margins under scrutiny as the market settles into this next phase.