Motor claims hit record high in Q1

13th May 2025

Motor insurers paid out a record £3.2bn in car insurance claims in the first quarter of 2025, the highest quarterly payout since records began in 2013, according to the Association of British Insurers (ABI). 

Repairs accounted for £2.1bn of the total claims. Increasing repair costs have been driven by rising prices for replacement parts, higher labour costs, inflation, and a shortage of skilled technicians. The complexity of modern vehicles also contributes to the growing expenses. Components such as wing mirrors now include advanced technology like actuators, sensors, and lights, making even minor repairs more costly.

The cost of theft claims also surged, with the average claim for theft of and from vehicles reaching £11,300.

In total, 632,000 claims were settled during the first three months of the year, underlining the impact of rising claims on insurers.

Despite the record claims, the average cost of motor insurance dropped to £589 in Q1, down five per cent from the previous quarter and seven per cent from the same period in 2024.

Mark Shepherd, Head of General Insurance Policy at the ABI, emphasised the need for ongoing efforts to reduce claims costs. He highlighted the ABI’s 10-Point Roadmap, which aims to address cost pressures, but urged further government intervention to tackle the skills shortage in vehicle repairs, improve road safety, and avoid increasing Insurance Premium Tax.

“While our latest figures show a drop in average motor insurance premiums, we know the price of cover remains a strain on household finances,” Mark said. “Efforts to reduce costs have led to some progress, but affordability remains a concern.”