Navigating the Future: What to Expect in the Commercial Motor Insurance Market in 2025

The motor insurance market has faced significant challenges over the past few years, driven by Covid-19 induced production issues, supply chain disruption and inflationary pressures. As we move into 2025, the market continues to evolve, with new factors influencing premiums and claims.

This blog explores the importance of understanding the significant trends and developments currently impacting the commercial motor insurance market. The industry is battling a number of challenges and the market continues to navigate a multitude of challenges and in the short term I cannot see any easing as claims costs continue to rise and supply chain issues show no sign of any swift resolution.

Developments and Trends:

Inflationary pressures 

Inflation has significantly increased the costs of motor parts and vehicle repairs. The Association of British Insurers (ABI) reported that vehicle repair costs surged by 32% in the third quarter of 2023, reaching a record £1.6 billion. Despite inflation being expected to gradually start declining in 2025, the uncertain economic landscape means premiums may still be affected. There are several ways fleet managers can mitigate the costs such as preventative maintenance and swift accident reporting which helps with expediting the claims process. 

Evolving technology  

The advancements and increased incorporation of new technology such as blind-spot cameras and GPS sensors have improved driver safety and bolstered operational performance among fleets. This has an interesting impact on the market because although this technology has the potential to reduce accidents, vehicles with a high level of tech can be more difficult to repair, leading to an increase in premiums. It is therefore thought technology will have a major impact on the market in 2025 whether this will be positive or negative is yet to be seen. 

Driver Shortage 

The recent surge in e-commerce has led to a significant increase in demand for delivery drivers, resulting in a shortfall of 35,000 to 40,000 heavy goods vehicle drivers. While some businesses have adjusted their recruitment and retention strategies to combat these issues, others have had to lower their driver standards to fill open positions.  This approach, however, could lead to increased motor related claims in 2025. Additionally, nearly half a million Driver Qualification Cards are set to expire before the end of the year, necessitating mandatory training for many drivers. 

Crime Rates 

A rise in the value of second-hand vehicles has made them attractive targets for criminals. ABI data indicates that payouts for vehicle theft increased 35% in the third quarter of 2023 compared to the previous year. There has also been an increase in cargo theft, due to the inflated costs of goods and services, which could continue in 2025. 

Strategies for navigating the market 

• Implement Fleet Telematics – Telematic systems and other technology solutions allow for real-time data analysis to aid in risk management. The risks associated with this data need constant scrutiny especially in relation to data and cyber security. 

• Prioritise Accident Prevention – Prioritise accident prevention initiatives and establish proper post-accident investigation protocols

• Establish Effective Onboarding Measures – New drivers require effective onboarding and existing drivers require regular retraining. Implement a robust retention programme to maintain experienced drivers. For instance, provide upskilling opportunities, ask drivers for feedback on working conditions and implement measures to improve employee well-being. 

The commercial motor insurance market looks set to be influenced by a range of factors in 2025, from inflationary pressure to driver shortages. By adopting proactive strategies and leveraging new technology, businesses can better navigate these trials and tribulations. 

Take control of your fleets today!

Contact Macbeth for expert advice and tailored insurance solutions that meet your business needs – Call us on 0118 916 5480