In October 2024, the Government launched its Motor Insurance Taskforce aimed at considering the factors underlying the high cost of motor insurance and particularly the impact on the vulnerable.
The taskforce has worked with a stakeholder panel representing consumers and the motor and insurance industries and its final report was published on 10 December.
In the ministerial foreword it is specifically noted that:
"The latest figures from the Association of British Insurers show that motor insurance premiums have dropped in each quarter so far across 2025, with the average premium in Q3 of 2025 being £56 lower than the average in Q3 2024. The taskforce’s work has now concluded, and this report now provides a roadmap to real change in the motor insurance ministerial foreword 5 market. Over the coming months, we as a government will deliver on the actions set out here, securing better value for money for all motorists."
The actions set out in the report cover five areas:
A well-regulated insurance market
Noting that:
- The FCA has published further analysis on the cost of motor insurance for particular customer groups;
- The FCA will publish its conclusions on premium finance in 2026; and
- The Government will continue to work closely with the FCA to support possible insurance use cases for smart data, including in the FCA’s Smart Data Accelerator.
Improving claims processes
Noting the FCA will:
- Work with the ABI and firms to consider how claims can be better managed to ensure greater efficiency and cost control, without adversely affecting customer outcomes;
- As recommended in the FCA’s report, the ABI and firms are working to develop a good practice code to reduce referrals to third parties and capture the management of more claims; and
- The Government welcomes the work by the CHO and the ABI to revise the GTA to ensure credit hire costs are fair for consumers.
Making our roads safer
Noting the Department for Transport intends to publish a Road Safety Strategy and will continue to invest in highways maintenance.
Tackling uninsured driving, fraud and crime
Noting that the FCA will continue to call for more action to be taken by social media companies to prevent fraudulent content from appearing on their platforms. Where the FCA identifies unlawful content, including ghost broking, ad-spoofing and material posted by finfluencers:
- It will seek to get the content removed and work with other partner agencies, including law enforcement, working to combat these activities;
- The Home Office will continue its efforts to tackle vehicle theft, introducing new offences concerning electronic devices that are used in vehicle theft through the Crime and Policing Bill;
- The Department for Transport will consider penalties associated with uninsured driving and will continue to engage with counterparts in Northern Ireland to support their exploration of the potential benefits and feasibility of a Continuous Insurance Enforcement scheme; and
- The ABI will continue work with the National Vehicle Crime Intelligence Service at the port of Dover to enable disruption and enforcement activity against criminals who intend to export stolen vehicles from the port.
Strengthening the vehicle repair sector
Stating that:
- The taskforce encourages the motor insurance industry to work closely with vehicle manufacturers to review the vehicle risk rating system;
- The Department for Business and Trade will maintain positive relationships with industry to ensure a steady exchange of information on supply chain issues and concerns and that, through the long-term investment announced in the Industrial Strategy, will drive innovation, scale up and commercialisation in new vehicle technologies, driving efficiencies and reducing costs;
- The Department for Education and the Department for Work and Pensions will improve skills and training for key professions, aligned with the Industrial Strategy; and
- The Department for Transport plans to consult on the introduction of new battery health measures for electric vehicles.
The Government specifically note that the UK's motor insurance market is highly competitive, meaning that pricing responds quickly to external changes. The FCAs recent analysis had made it clear that higher premiums between 2019 and 2023 were largely due to above inflationary claims costs that were outside of firms' control and not driven by profit. They have noted the main drivers to be:
- More complex and expensive cars;
- Supply chain delays;
- A shortage of skilled labour;
- Increased costs of replacement vehicles;
- Rising bodily injury claims values;
- Increasing numbers of car thefts; and
- A rise in costs associated with uninsured drivers.
Against that background, the report notes that when adjusting for inflation, motor insurance premiums are, in real terms, comparable to the levels charged in 2017 with a real-terms decrease year-on-year between Q3 2024 and Q3 2025 of £79 – despite the high costs faced by motor insurers.
Having noted that UK premiums are difficult to compare with those in other countries due to significant structural, legal, operational and cultural differences, the report does find that the UK’s average annual cost for comprehensive motor insurance is comparable to other EU jurisdictions. The conclusion reached is that there is no compelling case for a move to a no-fault system.
The report focusses on the need for high regulatory standards, whilst also recognising that the regulatory environment impacts the costs faced by firms in providing their services and, in turn, the premiums paid by consumers. Th FCA is reviewing aspects of its insurance rules to ensure they work well for all the different types of products, providing appropriate protections to consumers whilst supporting innovation and growth, and evaluating the impact of its recent interventions. No regulatory changes are proposed in the report as the FCA continues its investigations. The Government will, however, continue to hold the regulators to account.
On consumer protections and financial inclusion, the report concludes that the Government will not intervene in pricing, the consequences of which would be hard to predict.
On insurance premium tax (IPT), the report notes that revenue raised by IPT funds important public services, such as the National Health Service, defence, and education. There is no commitment to do anything to address IPT which is noted to be a decision for the Chancellor and announced at fiscal events.
Should you wish to discuss the findings of the report or any of the proposed actions, please contact one of the experts in our Strategic Advisory Team.
