Mobility provision a minor factor in surging cost of motor claims

Trends in UK motor claims costs post-Covid were analysed in some detail by the FCA in 2025, as part of the regulator’s contribution to the government’s Motor Insurance Taskforce report. 

The FCA data, culled from 12 motor insurers and published last July, found credit hire costs increased by 48%, or £226m, between 2019 and 2023 (£473m – £699m). The overall increase in claims costs between the same dates was £6.8bn – £9.1bn, a 34% rise against inflation of 21% over the same period. 

To be sure, the data period (2019-2023) related to an extremely volatile claims industry immediately post-Covid, when inflationary pressures in both the hire and repair market were at their height, but that did not stop some excitable voices calling for the government to step in and reform the way the credit hire market operates. 

There were some important gaps in the data supplied by insurers to the regulator. The FCA report gave no weight to subrogated repair costs, a significant driver of claims inflation, which insurers did not include in their submission, or insurer inflated claims against the at-fault insurer (Coles v Hetherington).

If the year-on-year reductions in accident frequency continue, it is certain that mobility costs will continue to be a minor part of the overall cost of motor claims

The CHO submitted its own data set to the Taskforce, supplied by eight member companies representing 60% of the market, using the same criteria as the FCA and covering a mix of GTA and non-GTA subscribers. 

In 2025, there were 464,000 credit hire referrals, of which 325,000 (70%) were settled, at an average value of just over £2,000. Litigation rates were 4.76%. The data is for all vehicle classes, including prestige vehicles, which are generally more expensive to hire. The net daily hire rate across all vehicle classes was £48.25, which also takes account of average commission fees, which in most cases are paid to the referring insurer.

Turning to mobility as a proportion of claims costs, the ABI suggested that in Q1 & Q2 2025, RTA insurers paid £6.3bn in claims costs, equivalent to £12.6bn pa. The net cost of mobility in 2025 was £426m, stripping out average commissions, meaning mobility as a proportion of total claims cost is c3.76% using settled claim data. Furthermore, if the year-on-year reductions in accident frequency continue, it is certain that mobility costs will continue to be a minor part of the overall cost of motor claims. 

More recent data from our sector shows that, while average hire days in 2022-2023 were 29, the average has fallen to 23 days (2025), with a concomitant reduction in claims costs as the market normalised. 

Right call

In summary, the CHO evidence concurred with the FCA that there was some inflation from the provision of replacement vehicles, but the increase is modest, and thus not a significant contributing factor to motor insurance premium inflation. 

It was therefore the right call that the Taskforce did not recommend regulatory action against mobility provision, and instead made clear its support for a successful conclusion to the ongoing negotiations between CHCs and motor insurer for a revised GTA. 

What is blindingly obvious – and what all the data underlines – is that repair costs are the major driver of claims inflation. As the FCA itself noted in its report, ‘Claims costs associated with repairing vehicles after accidental damage and property damage claims have increased significantly, accounting for 65% of the overall increase in total claims costs between 2019 and 2023. 

This is due to longer lead and repair times, more expensive and complex vehicles, and the limited availability and rising cost of skilled labour. In 2026, these inflationary factors are still very much in evidence, and I’m not sure there’s much regulators or insurers can do to push back.