UK Motor insurance crisis: drivers cut back or go uninsured

Policyholders Cutting Back on Cover

New analysis from independent consultancy Broadstone, drawing on the Financial Conduct Authority’s Financial Lives Survey, shows that more than one in seven motorists (15%) have reduced their level of cover in the past two years. Around 7% proactively contacted their insurer to scale back, while 9% did so when renewing or buying a new policy.

The pressure is most acute for those already under financial strain. A quarter (25%) of drivers with heavy credit burdens reported opting for reduced cover, with nearly one in ten (9%) actively calling their insurer to make cuts.

This reflects the wider cost-of-living crisis. Nearly four in five (78%) of those switching or renewing said their premiums had increased noticeably — a sharp rise from 49% in 2022. Premium inflation through 2023 and 2024 has been especially steep, prompting insurers to launch more stripped-down “no-frills” products with optional add-ons. While these packages increase flexibility, they also risk leaving motorists exposed to financial gaps in protection.

“Ongoing cost-of-living pressures and historically high premiums are forcing people onto cheaper policies,” said Cormac Bradley, Senior Actuarial Director at Broadstone. He argues that innovation is now essential, with usage-based and pay-per-mile insurance offering affordability without compromising vital protection.

Price Comparison Sites Dominate

Despite these challenges, price comparison websites remain the cornerstone of the UK motor insurance market, with Broadstone’s research showing that 64% of adults who took out, renewed, or switched motor insurance in the last three years used an aggregator site, up from 58% in 2022. Direct purchases from providers still account for nearly a quarter (24%) of policies, while only 4% of consumers use brokers, highlighting how digital-first shopping has reshaped the market. For insurers, this shift creates added pressure, as competing on aggregator platforms requires striking a careful balance between visibility, pricing competitiveness, and profitability.

Fear of Fraud on the Roads

Cost isn’t the only concern troubling UK motorists. Nearly one in five (19%) drivers fear other road users staging accidents to claim insurance payouts - a growing fraud risk.

This anxiety is reshaping driver behaviour too:

• 15% of UK motorists have installed dashcams specifically for insurance purposes
• .8% say they drive less frequently out of concern about becoming a victim of a staged accident.

These trends reflect a climate of distrust and heightened caution on Britain’s roads.

Industry Response: Data, Innovation, and Affordability

Experts say restoring trust and affordability in the motor insurance market requires a dual strategy: innovation in product design and smarter use of data analytics. Both are seen as critical to easing the financial burden on motorists while ensuring insurers can manage risk effectively.

Sara Costantini, Regional Director for the UK & Ireland at CRIF, warns that unaffordability has serious consequences. “UK drivers are struggling with spiralling premiums and it’s deeply concerning to see millions of people take to the road uninsured as a result. They’re not only breaking the law but also putting them and others at increased risk.” She highlights technology as a key part of the solution, stressing that better use of data can improve risk assessments, enhance fraud detection, and ultimately lower costs.

CRIF points to tools such as its Traffic Exposure Score, which incorporates traffic flow and accident risk data to refine underwriting. Already rolled out in the UK, similar models in Europe have helped insurers improve loss ratios by up to 2.5%, showing how innovation can directly support affordability without undermining financial stability.

The Road Ahead

The UK motor insurance market is under severe pressure, with consumers scaling back cover, some considering driving uninsured, and concerns about fraud on the rise. Insurers, meanwhile, face the challenge of balancing underwriting discipline with the need to keep products affordable for households squeezed by rising costs.

Solutions are emerging, from flexible usage-based and pay-per-mile policies to clearer communication on the risks of reduced cover. Smarter use of data to combat fraud and refine pricing could also help ease pressures. But unless affordability improves, the UK risks a widening coverage gap with serious consequences for motorists, insurers, and road safety.

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