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Motor insurance shopping trends in the U.K. for H2 2024

Issued H1 2025

A quick look at motor insurance shopping trends in the U.K. Q2 2024.Contents

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LexisNexis^® Risk Solutions Insurance Demand Meter U.K.

LexisNexis^® Risk Solutions Insurance Demand Meter U.K. H2 2024

Shopping and switching rates remain the highest on record — but appear to be plateauing, indicating that pressure on U.K. motor insurance policyholders may finally be easing

Current state of play
More consumers shopped around for a better motor insurance deal in 2024 than in the past two years. Looking at H2 2024 alone, shopping activity was brisk, up 4% from H2 2023, which equates to approximately 14,000 additional people per day considering a change of insurance provider. The effort paid off for many, as 2024 also proved to be a record year for switching. A dip in switching, experienced in the immediate aftermath of the Financial Conduct Authority (FCA) anti-price-walking rules, was seemingly short-lived as 24% of motor policy purchasers switched providers in Q4 2024.

Looking forward
While it’s still too early to say conclusively, so far, both shopping and switching activity appear to be cooling off in 2025. This would correspond to the large premium decreases seen in 2024¹, and an easing of inflation² which may have reduced the pressure on some U.K. motor insurance customers. However, price-savvy customers are expected to continue to shop around for the best deals given on-going cost of living challenges.

All citations can be found on page 6.

The balance of power appears to be shifting

Up until now
Since mid-2023, the top 10 insurers won more policies than they lost to the rest of the market as they pursued volume. The capacity challenges in the market in addition to increasing regulatory demands may have also hindered smaller insurers from competing against the big insurers.

Current state-of-play and future opportunities
With a strong focus on reducing costs for the motor insurance industry, the U.K. government committed last October to maintain the current downward trend of motor insurance premiums.³ This can be seen as further relief to smaller insurers, who may already be feeling the benefit of lower inflation. Indeed, lower inflation levels may have enabled the reversal of the win/loss trend in favour of the rest of the market. The recent flurry of merger and acquisition (M&A)⁴ activity in U.K. insurance, for example, the announcement of the purchase of Direct Line Group by Aviva, Ageas agreeing to acquire Esure and the merger of Atlanta Group and Markerstudy appears to indicate a consolidation of power within the industry. There is opportunity across the board for insurers to improve their portfolios by understanding the segments they have chosen to compete in and selectively choosing policyholders in line with their risk appetite.

Top 10 motor insurers appear able to retain the right customers

Current state-of-play
Motor policy cancellation⁵ rates for the top 10 U.K. insurers were consistently lower than for the rest of the market, demonstrating their ability to choose and retain better risks in the U.K. motor insurance policy market. Indeed, H2 2024 saw a cancellation rate of 13% for the top 10 insurers vs. 18% for the rest of the market. A significant factor is a lower rate of insurer-led cancellations reported by the top 10 insurers⁵ when compared to the rest of the market, again implying that the top 10 insurers were more effective at identifying risky customers at point of quote. Where a cancellation reason was supplied, the insurer-led cancellation rate for the top ten insurers in H2 2024 was approximately half the rate seen for the rest of market. The top 10 insurers also cancelled policies due to application fraud at a rate 3.3 times greater than the rest of the market.5 This suggests that the top 10 insurers continue to be more capable of identifying motor policy application fraud than the rest of the market.

Expectations
There was a modest increase in cancellation rates from H2 2023 to H2 2024 for both the top 10 insurers and the rest of market. Where a cancellation reason was provided, this was primarily driven by insured subject-led cancellations. This may provide further evidence that U.K. motor insurance policyholders continue to feel the pinch of the cost-of-living crisis. Insurers of all sizes are expected to work on improving their insurer-led cancellation rates by enhancing their underwriting and fraud detection capabilities during 2025.

Looking Ahead

With motor insurance premiums now levelling off, some insurers suggest the price surges seen in the last few years have ended. Initiatives such as the cross-government motor insurance taskforce have resulted in insurance providers working collaboratively to tackle the factors that have contributed to higher premiums. This may equate to more price competition in the market. However, cost-of-living pressures remain, and therefore it is likely that shopping and switching activity in motor insurance will stay elevated in 2025.

Meanwhile, data analysis by LexisNexis Risk Solutions suggests the big players in the market are more equipped to select and retain the profile of risk that meets their appetite. Their dominant position in the market appears tenuous however, and any easing of costs on behalf of insurance providers should help more niche providers compete in 2025.

Consumers shopped and switched in 2024 at a level not seen in the past two years, as premiums rose and the cost-of-living crisis impacted household budgets.

In the space of a year, we have gone from around 1 in 5 consumers switching to 1 in 4.

This not only underlines the price competitiveness in the market it also demonstrates the ease with which consumers are now able to shop and change providers.

TOM LAWRIE-FUSSEY
Senior director of product management, U.K. and Ireland, LexisNexis Risk Solutions

Citations

1. Car insurance premiums see biggest fall in over 10 years – WTW
2. Monetary Policy Report - November 2024 | Bank of England
3. Ministers bring together industry experts and consumer champions to tackle spiralling costs for drivers - GOV.UK4. https://www.aviva.com/investors/offer-for-direct-line-insurance-group-plc/
https://www.rsainsurance.co.uk/press-releases/2023/intact-financial-corporation-and-rsa-announce-exit-from-uk-personal-lines-motor-market
https://www.zurich.co.uk/media-centre/zurich-to-refocus-personal-lines-home-and-motor
https://www.covea.com/sites/default/files/2024-06/covea_annual_report_2023.pdf - page 13
https://www.markerstudy.com/brokers/news/2024/june/03/markerstudy-and-atlanta-merger-approved/
www.ageas.com/en/newsroom/ageas-reaches-agreement-with-bain-capital-to-acquire-esure-and-establish-a-top-3-uk-personal-lines-platform-3060616
5. This excludes cancellations during the initial 14-day “cooling off” period where a cancellation reason was given