UK and Ireland insurance claims outlook, Q3 2026: what changed and our forecasts to 2027

The forecasts in brief

The +11.0% motor insurance CPI forecast has a wide range because that series moved violently in 2023 and 2024. It should not be read as a forecast of the premiums insurers actually collect. The ABI's Q3 average paid premium was only 2% higher than a year earlier [5]. Both figures are shown below.

1. Quarter in numbers

Three things stand out.

The UK cost basket is close to normal, but the mix has changed. Repair inflation has come down. Parts, medical services and glass have not. The ABI's average windscreen claim was up 9% (adverse for insurers) in Q3 [5]. Used car prices are falling, which helps total losses [1].

UK official premium prices and transacted premiums do not agree. The ONS motor vehicle insurance CPI was +6.8% in the year to September [1]. The ABI average premium paid was +2% in Q3, and down after inflation [5]. Anyone forecasting loss ratio from a single premium series will get a different answer depending on which one they pick.

Ireland's official 2025 result was decent, and the 2026 price path is not. A 93% gross combined ratio and a 67% (favorable for insurers) loss ratio in 2025 were achieved with average written premiums still up 4% [3]. By September 2026 the motor car insurance CPI was down 5.0% and repair inflation was still 9.1% (adverse for insurers) [2].

October also brought the first two named storms of the season, Austen and Boelo, four days apart [8][9]. Met Éireann recorded a national rainfall total of 155.3 mm (adverse for insurers), 120% of average, and storm-force winds in Boelo, including a 73-knot gust at Malin Head [9]. No official insured-loss total for the two storms is included here, because none had been published.

2. UK claims cost scorecard

The scorecard is a simple, open index. Each component is scored against its own September history from 2018 to 2025. A score of 50 means the component is at its normal level. Each 10 points above or below 50 is one standard deviation from normal. The UK score is the plain average of the cost components. Insurance price indexes are shown in the table for context and are not used in the composite, because a rise or fall in the premium index is not a claim cost.

Sources: [1]. The official "All Work" construction material index, ▲+7.2% (adverse for insurers) in September, is the better commercial property rebuild reference [4]. It is not scored here because this model does not have a comparable 2018 to 2025 September baseline for that series.

3. Forecasts to 2027

3.1 UK claim costs

The private motor claim cost basket is forecast to rise 3.6% in the year to December 2026, with an 80% range of 2.9% to 4.8%, and 3.5% in the year to December 2027, with a wider range of 3.0% to 7.5% [1]. Commercial motor, which carries a higher injury weight in this model, is a little higher, at 4.4% (adverse for insurers) to December 2026 [1].

Repair inflation is forecast to stay moderate, at 4.1% to December 2026 [1]. Hospital services are the component most likely to pick up, at 6.6% (adverse for insurers), with a range of 3.6% to 8.4% [1]. Legal services are forecast at 4.8% [1]. Second-hand car prices are forecast to still be down 3.3% (favorable for insurers) by December 2026 [1].

3.2 UK premiums, and why two official series disagree

The model forecast for the ONS motor vehicle insurance CPI is +11.0% to December 2026, with a wide 80% range of 4.6% to 16.5% [1]. The 2027 range is wider still. That width is a feature of the series, which rose more than 50% in late 2023 and then fell sharply in 2024 and 2025 [1]. A central forecast of 11% should not be used as a planning premium.

The ABI's transacted premium, which is what customers paid, was £562 in Q3, only 2% higher than a year earlier and £7 lower after inflation [5]. Until those two series move back together, loss-ratio work should carry both: a cost basket rising at about 3.6% to 4.4%, an official CPI premium path that may still be rising, and a transacted premium path that, in Q3, was almost flat in real terms.

House contents insurance prices are forecast to still be down 1.7% by December 2026, after a 9.5% fall to September, with a range that includes a small rise [1]. If construction materials stay near 7.2% (adverse for insurers), the property price-to-cost gap remains the wider risk [4].

3.3 Ireland: a 2025 combined ratio, a 2026 price warning

We do not fit a monthly ARIMA path for Irish claim costs, because the official claims record is annual. The latest official year, 2025, had a gross combined operating ratio of 93%, a gross loss ratio of 67% (favorable for insurers), claims cost per policy of €424 (adverse for insurers) (up 10% (adverse for insurers)) and an average written premium of €655 (up 4%) [3]. Damage claims cost per policy was at a series high of €197 (adverse for insurers) [3].

The 2026 official prices point the other way. Motor car insurance was down 5.0% in the year to September, and vehicle maintenance and repair was up 9.1% (adverse for insurers) [2]. A simple illustration, not a fitted forecast: if damage severity rose with repair inflation and premiums followed the CSO index, the damage portion of the book would take material pressure in 2026 even though the 2025 combined ratio was 93%. Injury may stay more stable, because the Personal Injuries Guidelines are now used in almost all direct and Board settlements, and average compensation on smaller claims is still below 2020 levels, while legal and other costs on those claims are 29% (adverse for insurers) higher [3].

3.4 Frequency and catastrophe

Great Britain road fatalities fell 4% in 2025, while killed or seriously injured casualties rose 4% [7]. That is not a clean frequency easing, and it is not a claims series. The ABI's Q3 payouts, up 8% (adverse for insurers) against a 1% (adverse for insurers) rise in the average claim, imply a higher claim count than a year earlier [5]. We do not convert that one quarter into a 2027 frequency forecast.

October's two named storms are a reminder that the 2026 to 2027 name list is only two names in. No official insured-loss total is attached. The property planning number that is official is the 7.2% (adverse for insurers) rise in construction material prices [4].

4. What it means for loss ratio and combined ratio

There is no published UK market combined ratio for Q3 2026 in the sources used here. The pressure figures below are changes in a loss ratio that starts at 70 points. That 70 is an illustration, not an official market ratio. Ireland's official 2025 starting points are the 67% gross loss ratio and the 93% gross combined operating ratio [3].

Private motor (UK)

On the cost side, the basket is forecast at +3.6% to December 2026 [1]. If transacted premiums only rise at the Q3 ABI rate of 2%, and frequency is flat, that is about ▲+1.1 points (adverse for insurers) of loss-ratio pressure on a 70-point book. If premiums follow the official CPI forecast of +11.0%, the same cost path would ease the ratio. The observed Q3 outturn, payouts up 8% (adverse for insurers) against premiums up 2%, is a heavier ▲+4.1 points (adverse for insurers) on the same illustration, because implied claim volumes rose [5]. The practical reading is that UK private motor is not in a cost-inflation crisis, but it can still lose ratio if transacted prices stay soft and claim counts stay high.

Commercial motor (UK)

The commercial motor basket is forecast at ▲+4.4% (adverse for insurers) to December 2026, a little higher because of its heavier injury weight [1]. Hospital services, forecast at ▲+6.6% (adverse for insurers), matter more on this line [1]. There is no separate official commercial-motor premium index in this edition, so we do not print a single loss-ratio pressure number for the line.

Commercial property (UK and Ireland)

The official UK "All Work" construction material index is up 7.2% (adverse for insurers) [4]. The house contents insurance CPI is down 9.5% [1]. That is a wide gap between rebuild cost and the official consumer insurance price, before any October storm claims develop. Ireland's dwellings-related insurance CPI was down 3.0% in the year to September [2]. Sums insured that were last set on 2025 material prices will be short.

Ireland private motor

The official 2025 combined ratio of 93% is the starting point, not the 2026 outlook [3]. The 2026 risk is a falling premium index against 9.1% (adverse for insurers) repair inflation and a claims cost per policy that is already at its highest since 2014 [2][3]. Legal costs on smaller injury claims remain the part of injury severity that is still rising [3].

Summary

The point estimates come from our model or from the official series cited. The ratings are our judgment.

5. Methodology

• Scores. Score = 50 + 10 × (current value minus baseline mean) ÷ baseline standard deviation. Components use the September year-on-year change. Baselines are September readings for 2018 to 2025. Line scores are plain averages of the components listed for each line. Insurance price indexes are not included in the composite.
• Data cutoff. Forecasts use UK CPI through September 2026, published on 21 October 2026. ABI motor figures are for Q3 2026. Irish claims figures are NCID 2025, published on 20 October 2026. Irish prices are CSO CPI through September 2026, published on 8 October 2026. Construction material prices are the official "All Work" index for September 2026, published on 4 November 2026. Storm observations are Met Office names and Met Éireann's October climate statement, issued on 3 November 2026.
• Cost and price forecasts. For each monthly index we average two forecasts of the log index: (1) the latest value carried forward at the average monthly change of the last 12 months, and (2) an ARIMA(p,1,q) model with drift, with p and q from 0 to 2 chosen by AIC on the full series. Ranges are the 10th to 90th percentile of the errors the same combined method made on every forecast origin from January 2012, or from the first origin with at least 24 months of history, measured in year-on-year percentage points at each horizon.
• Claim cost baskets. Private motor: 40% physical damage (75% vehicle repair CPI, 25% used-car CPI), 30% liability vehicle damage (vehicle repair CPI) and 30% injury. Commercial motor: 15% physical damage, 25.5% liability vehicle damage and 59.5% injury. The physical damage and liability shares, and the 50/50 split of private-motor liability between vehicle damage and injury (30/70 for commercial motor), are our assumptions, stated as such, not official UK market shares. Injury is an equal mix of hospital services CPI, medical and paramedical services CPI and legal services and accountancy CPI.
• Frequency. We do not forecast a 2027 UK claims frequency. Official GB road casualties for 2025 are mixed, and the ABI Q3 payout and average-claim figures imply a higher claim count in that one quarter. Those are reported, not projected.
• Loss ratio pressure. Change = base loss ratio × [(1 + severity) × (1 + frequency) ÷ (1 + price) - 1]. For the UK private motor illustration, the base is 70 points, stated as an illustration, not an official market ratio. Severity is the private motor basket. Frequency is held at zero in the forward illustrations. Price is shown two ways: the ABI Q3 transacted-premium growth of 2%, and the model forecast for the ONS motor vehicle insurance CPI. The Q3 "payouts versus premiums" illustration uses ABI payout growth of 8% in place of severity and frequency combined. Ireland figures use the official 2025 loss ratio and combined ratio, plus a qualitative 2026 price scenario, not a fitted monthly path.
• Limits. Most UK cost and price indexes are national. Construction "All Work" is an official material-price index, not an insured-loss series. Storm observations measure weather, not insured losses. ABI figures are UK industry aggregates. NCID figures are Irish private motor. Nothing in this report uses Inaza client data.