Electric car boom masks a shift in what motor claims cost

In September, 58.4 per cent of new cars registered in Britain were electric or plug-in hybrid, the fastest the market has ever moved in that direction in a single month.

An average premium that barely moves is not the same as a stable risk.

New car registrations hit 350,536 units in the month, up 12 per cent on the year, according to the Society of Motor Manufacturers and Traders. Battery electric vehicles alone took 28.3 per cent of that market, up 36.3 per cent, with plug-in hybrids up 55.5 per cent to a 17 per cent share.

Over the same stretch of this year, the cost of settling a motor claim kept climbing. The Association of British Insurers reported £3.2 billion paid out to motor customers in the second quarter of 2026, with the average claim up 4 per cent on the quarter to £4,900 and claims payments 7 per cent higher than the same quarter of 2025.

The average premium barely moved by comparison, up just £6, or 1 per cent, to £566 over the same quarter. Adjusted for inflation, it was actually £14 lower than a year earlier.

Hold those two facts together.

The car parc is turning over toward electrified vehicles faster than it ever has, and the average cost of a motor claim is rising at the same time, yet the average premium paid is barely moving and is falling once inflation is stripped out. Something in the middle of that chain is absorbing the difference, and it is not showing up in the headline average.

A chef who does not reweigh the pantry still prices the set menu off last year’s ingredient costs. The bill at the till looks the same. What changed is which dishes are actually eating the margin.

Electric and hybrid vehicles are widely reported by repairers and engineers to cost more to fix than petrol or diesel equivalents, because of battery packs, sensor arrays and parts that only a narrower pool of specialists can safely work on. A book-wide average claims figure cannot tell an insurer, or a customer, whether that is true for the specific car sitting on a specific policy.

A rising average claims cost spread evenly across a book that is now 58.4 per cent electrified in new sales is not the same underwriting problem as a rising average claims cost spread evenly across a book that was mostly petrol a year ago. The risk mix has moved. The pricing signal, judging by the premium figure, has not moved anywhere near as far.

Consumer Duty asks firms to deliver fair value, and fair value is a question about the customer in front of an insurer, not the average customer somewhere in the back book.

A driver of a petrol car bought five years ago and a driver of a new battery electric car bought this September are not the same risk. Neither should quietly be charged as if they were, just because the book-wide number still looks calm.

If claims costs are moving because the vehicle mix is moving, and premiums are not moving to match, somebody is cross-subsidising somebody else inside that average, whether or not anyone intended it. The number that matters here is not the one in the headline. It is the one underneath it, by vehicle type, that nobody in this data has published yet.