Is the UK Motor Market Finally Hitting the Floor?
For the past two years, the UK motor insurance market has felt like a race to the bottom. Competitive prices have plummeted by 25.6% since the start of 2024, driven by fierce competition and a recalibration following the post-pandemic claims surge. However, the latest data from the Pearson Ham Q4 2025 Price Index suggests the "hockey stick" curve is finally flattening out.
The End of Broad-Brush Deflation
While motor premiums fell for their eighth consecutive quarter in Q4 2025, the -1.4% drop was a marked slowdown from the -4% and -3% falls seen in earlier quarters. Monthly movements in October and November 2025 were marginal—drifting by only -0.7% and -0.3% respectively.
This isn't just a seasonal dip; it’s a structural shift. We are moving from a phase of broad, aggressive price cuts to one of "finer adjustments". Insurers are effectively finding their sustainable floor.
A Divergent Market
The report highlights an emerging "dual-track" market:
Group A: Providers who reached their floor early in 2025 and are already nudging rates up in select segments.
Group B: Providers still pushing for volume but finding the margins increasingly squeezed by persistent claims inflation.
The Resnova Perspective
For MGAs and niche insurers, this stabilisation is an opportunity. When the "big players" stop blunt price-cutting and start focused segmentation, the value of high-quality data and agile underwriting skyrockets.
As the market enters 2026, the winners won't be those with the lowest price, but those who can most accurately identify profitable segments within this new "price floor". At Resnova, we believe this is where the industry's focus must shift: from short-term volume to long-term underwriting discipline.
