Analysis from Deloitte says the UK home and motor market could save up to £500m in annual productivity savings by 2030. More than half (55%) of these potential savings sit within core operations such as claims management, IT and support functions, which the consultancy says would free up insurers to strengthen margins and boost market resilience.

The Deloitte research shows that AI-enabled claims functions could improve claim processing times by 20%. When combined with improved self-service offerings and more straight-through processing, it says productivity could increase by 40%.

Deloitte calculates that insurers have the opportunity to drop their aggregate administrative expense ratio from its current rate of 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.”