Deloitte analysis: UK home and motor insurance industry could unlock up to £500m in annual productivity savings by 2030

• Capturing these productivity gains could lead to a fall in insurer’s aggregate administrative expense ratio from 10.3% to 8.7% by 2030.
• Net earned premiums for home and motor insurers are projected to have a compound annual growth rate of 2.5%, increasing from £22.8b to £26.4b by 2030.
• Average combined premiums for home and motor fell 4.3% year on year, from £916 in Q1 2025 to £877 in Q1 2026, according to ABI data, while insurers continued to face rising costs. 

UK home and motor insurers could collectively unlock up to £500m in annual productivity savings, according to new Deloitte analysis. More than half (55%) of this saving opportunity sits within core operations, claims management, IT, and support functions - giving insurers significant scope to strengthen margins, fund reinvention and build resilience as market conditions continue to soften.

Deloitte modelling shows that AI-enabled claims transformation can materially improve claims performance, improving the time it takes to process a claim by up to 20%. In turn, and alongside other measures such as greater levels of digital self-service and straight-through processing of claims, productivity could be increased by up to 40%.

Dotun Aboaba, director at Deloitte, said: “The result is a faster, more efficient claims experience that allows home and motor claims professionals to focus more of their time on complex customer needs and value-adding activities.”

In the near term, home and motor insurers are expected to remain under pressure from falling premiums and rising claims costs. ABI data shows that average combined premiums fell 4.3% year on year, from £916 in Q1 2025 to £877 in Q1 2026, while Deloitte expects elevated materials inflation to continue driving costs higher.

However, over the longer term, Deloitte expects net earned premiums to grow at a compound annual rate of 2.5%, increasing from £22.8b to £26.4b by 2030. Insurers that act now and capture these productivity and efficiency savings could see their administrative expense ratio fall from 10.3% to 8.7% by 2030.

Jim Allen, partner at Deloitte, said: “The insurance market in the UK is at an inflection point. Insurers are entering a softer market at a time when claims inflation remains elevated, which means that they need to make changes to their operations now to ensure long term growth and future profitability.

"Capturing these savings requires more than incremental efficiency measures. It means redesigning work, embedding leading practices and using AI, automation and redesigned workflows to improve delivery economics without compromising customer, broker or business outcomes.”

ENDS

Notes to editors

• The administrative expense ratio is a measure of operating efficiency used by insurance companies. It is calculated by dividing administrative expenses (i.e. operating expenses, excluding acquisition expenses) by net earned premiums (NEP).
• CAGR means compound annual growth rate. In this press release it represents the average annual rate of NEP growth over the specified period.
• The current NEP and administrative expense ratio figures featured in this press release are based on data held by the Association of British Insurers (ABI).
• The 2030 NEP, AER and expense structure breakdown figures featured in this press release are based on Deloitte analysis of historical data held by the ABI.
• AER figures are rounded to one decimal place and may not sum precisely to the totals shown. Deltas are calculated using unrounded values.
• Savings estimates combine bottom-up functional analysis with top-down expense ratio sizing, drawing on Deloitte’s recent insurance productivity and cost transformation experience.
• Deloitte subscribes to ABI data and has the right to reproduce it as part of its own communications materials.