UK and Ireland insurance regulation update, October 2026: motor finance still paused, Irish claims costs set out

1. UK motor finance scheme: still paused, with an October update for firms

The FCA's motor finance compensation scheme was designed to cover commission-disclosure failings on finance agreements between 6 April 2007 and 1 November 2024 [2]. After legal challenges, the Upper Tribunal suspended parts of the scheme. Firms are not required to calculate or pay scheme redress, or to send communications about compensation owed under the scheme, until that process concludes [1].

The FCA first set out that partial suspension in July. The October event is an update, not a restart. On 19 October the FCA revised its further information for firms on the scheme, adding and expanding questions on scope, process and the effect of the suspension [4]. It has also set out minimum expectations for any voluntary settlement offers made while the scheme is paused, including that an offer presented as full and final should be at least the maximum that would be due under the scheme methodology, and that consumers should have at least a month to respond [5].

The Tribunal has said it will hear the challenges on 14 to 18 December 2026 or 16 to 26 February 2027, depending on applications in the case, with a judgment expected in the following months [1]. If the scheme is upheld and not appealed, the FCA has said it expects payments to begin in 2027 [2]. Until then, the operational point for insurers and lenders is the work that is not suspended: identifying relevant complaints and agreements, gathering commission and disclosure data, and, where the scheme says a complainant is not owed compensation, meeting the remaining letter deadlines [1].

Those deadlines are close. If an agreement began on or after 1 April 2014 and the customer complained by 30 June 2026, a "not owed" letter is due by 18 November 2026. If the agreement began earlier and the customer complained by 31 August 2026, the letter is due by 18 January 2027 [1][2]. These are conduct and operational dates, not a motor claims inflation event. They still matter for any group that writes motor, finance or both, because complaint volumes, customer contact and residual commission issues will sit alongside ordinary claims work into 2027.

The FCA has said that people who receive compensation would get around £830 per agreement on average, with some getting more and some less [2]. That is the FCA's published average, not a forecast of what any one book will pay, and it is not due while the scheme remains suspended.

2. Ireland: the official 2025 claims record, published in October

The Central Bank of Ireland published NCID Private Motor Insurance Report 8 on 20 October, with accompanying research on where premiums go [3][6]. The figures are for 2025. They are still the latest official claims, profitability and settlement statistics for Irish private motor, and they are the baseline for any 2026 view.

The average written premium was €655, up 4% on 2024, with a decreasing trend in the last two quarters of 2025 [3]. Claims cost per policy was €424 (adverse for insurers), up 10% (adverse for insurers), the highest since 2014 [3]. The gross loss ratio was 67% (favorable for insurers), down from 73% in 2024. The gross combined operating ratio was 93% [3]. Those 2025 ratios improved because premiums rose. They are not a 2026 forecast, and they should be read next to the September CSO figures: motor car insurance prices down 5.0% over the year, and vehicle maintenance and repair up 9.1% (adverse for insurers) [7].

The report also pins down two settlement facts that claims leaders can use. First, injury claims that go to litigation still take 4.7 years on average to settle, against 1.7 years when they settle directly and 2.6 years through the Injuries Resolution Board [3]. Second, the Personal Injuries Guidelines, adopted in 2021, now cover virtually all injury claims that settle directly or through the Board. In the second half of 2025, 76% of litigated injury claims settled under the Guidelines and 24% still settled with reference to the Book of Quantum [3]. Average compensation on Guideline settlements is lower than comparable Book of Quantum settlements from 2020, but legal and other costs on claims under €100,000 have risen 29% (adverse for insurers) over that period [3].

The Guidelines themselves have not been replaced. A proposed increase has not taken effect, and the Judicial Council (Amendment) Bill 2026, published as a general scheme earlier in the year, was still a legislative proposal in October, not a new set of award levels [8]. Until the Oireachtas approves new guidelines, the 2021 levels remain the ones that settled claims are being measured against.

The Central Bank's 2022 differential pricing rules, which stop firms charging renewing home and private car customers more than an equivalent first-renewal customer, also remain in force. The Bank's formal review of those rules for the Minister for Finance is the December 2023 report [9]. No new 2026 review was published in October, and this edition does not treat that 2023 report as a new event.

3. Automated vehicles: the Act is in force in stages

The Automated Vehicles Act 2024 is being brought in by commencement regulations, not all at once. Further commencement regulations were made in 2026 [10][11]. Marketing restrictions under the Act are due to commence on 7 January 2027 [11]. That is a product, approval and wording date for anyone writing or planning automated-vehicle cover in the UK, including Northern Ireland, which is a UK jurisdiction for this purpose. It is not yet a volume claims event. The emerging-risks piece in this edition covers the licensed vehicle numbers.

Key dates

What this means for underwriting and claims

UK. The motor finance scheme is a conduct and operations problem, not a reason to change physical damage severity. The work that is not suspended still has dates in November and January. Voluntary settlement offers made now need to meet the FCA's published expectations, or they will create a second complaint problem later.

Ireland. The official 2025 combined ratio of 93% is not a 2026 rate adequacy conclusion. The rate and reserve question is whether a falling premium index can fund a claims cost per policy that is already at its highest since 2014, with repair inflation still at 9.1% (adverse for insurers) and legal costs still rising on the smaller injury claims.