Rising premiums and falling injury claims saw the UKs motor insurance market record higher underwriting profits last year than at any point since 1994.
That is according to data from consultancy firm EY, which reveals that motor insurer's Net Combined Ratio (NCR) was 96.8% in 2017, compared with an unprofitable 109.4% in 2016.
This is the second-best result since records began, and largely thanks to the government backtracking on plans that would have seen higher compensation payouts for serious injuries.
Proposed changes to the Ogden discount rate made in February 2017 were expected to cost insurers up to £3bn, and saw companies add to their reserves and hike premiums.
However, reforms announced earlier this year allowed insurers to release some of these reserves, with EY estimating the 2017 NCR would have been 1.6% higher had that not been the case.
"Motor insurers have experienced a reversal in fortunes, buoyed by the anticipated changes to the Ogden rate," EY UK general insurance market lead, Tony Sault, said.
"The outlook for 2018 looks bright as the industry continues to benefit from the premium rises during 2017."
EY said the NCR for 2018 is expected to be slightly worse for insurers at 97.7%, but that business written last year should continue to perform well, with further reserve releases possible.
However, the ratio is forecast to worsen to 102.5% in 2019 as whiplash reforms in the Civil Liability Bill lead the government to put pressure on insurers to pass savings on to customers.
EY predicts that average personal motor insurance premiums will fall from the £491 peak recorded in 2017, to £471 over this year, and down to £455 during 2019.
"With the expected Ogden rate revisions and whiplash reforms, premiums are on the way down which is clearly welcome news for car owners, " EY UK insurance leader, Rodney Bonnard, said.
"And more good news could be on the way as the large players continue to vie for growth and market share, driving down prices further."
