Motor insurance premiums in the UK continued to fall in early 2025, though the rate of decline has slowed.
According to Pearson Ham Group’s General Insurance Price Index, the average top-five premiums dropped by 3.6% in the first quarter, following a 2.4% decrease in January, 0.9% in February, and 0.4% in March.
The most significant reductions were recorded among younger drivers, with those under 26 seeing premiums fall by nearly 17%. In contrast, drivers over 70 experienced a 13.4% decrease. Regional disparities were also evident, with the North-East seeing the sharpest drop at 19.5%, while Northern Ireland recorded the smallest decline at 13.4%.
The reductions come after a period of steeper declines in late 2024. Premiums fell consistently throughout the year, culminating in a 16% year-on-year drop by December. The fourth quarter alone saw a 5.5% reduction, contributing to a nearly 10% decline in the second half of 2024. November and December recorded the most substantial monthly decreases, reinforcing the broader downward trend.
Despite continued declines, the slowdown suggests shifting market dynamics. Stephen Kennedy, director at Pearson Ham Group, noted: “On the surface, it’s good news for consumers – premiums are continuing to fall. But the devil is in the detail. The rate of decline is clearly losing momentum, and we’re seeing stark differences across age groups and regions. That suggests market dynamics are shifting, and the blanket reductions of the past year may soon give way to a more complex pricing landscape.”
Home insurance premiums also declined in early 2025, with the average top-five prices for combined buildings and contents cover falling by 3.3% in the first quarter. January saw a 0.9% drop, followed by 1.3% in February and 1.2% in March, according to Pearson Ham Group’s index.
This follows a shift in late 2024, when home insurance prices fell by 1.7% in the fourth quarter. December alone saw a 1.3% decline, the largest monthly drop since May 2022, reversing the price increases seen earlier in the year.
Despite these recent reductions, home insurance premiums remain nearly 12% higher than a year ago, reflecting the lasting impact of previous price inflation.
Commenting on the data, Frances Luery, product manager at Pearson Ham Group said: “While premiums remain significantly higher than two years ago, this recent stabilisation is a sign of things to come this year.”
