Motor Insurance premiums have continued their decline – but now at a slower rate - according to Pearson Ham Group’s latest General Insurance Price Index for February.
Prices fell 0.9%, the smallest monthly decrease in the past year, bringing the annual movement rate to a fall of 19.3%. The median top five price for motor insurance was £470 in February, reflecting a continued downward trend. However, the moderation in monthly declines suggests the market may be stabilising after a prolonged period of falling rates. In January, Person Ham Group reported motor insurance premiums fell by 2.4%, the largest monthly decline since May 2024.
Older drivers saw the largest reductions, with premiums for those over 70 decreasing by 2.3% in February.
Across the UK, London recorded the largest decrease in motor insurance premiums at -1.3%, followed by the East of England at 1.2%. Northern Ireland, the East Midlands, the North West, and the West Midlands each saw declines of around 1%. The South West and Yorkshire & the Humber had reductions of 0.8%, while the South East and Scotland saw decreases of 0.7%. Wales recorded a 0.6% drop, and the North East saw the smallest decline at -0.2%.
Cars worth under £1,000 saw an average decrease of 1.2%, while vehicles valued over £20,000 had a smaller reduction of 0.5%.
“After a year of steep reductions, February’s smaller decrease is a signal that insurers are recalibrating their pricing strategies,” said Stephen Kennedy, director at Pearson Ham Group. “The question now is whether this slowdown marks the bottom of the cycle, or if external pressures – such as claims costs and regulatory factors – will drive further adjustments in the months ahead.”
The General Insurance Price Index also showed that home insurance premiums continued to fall in February, slipping by 1.3%, marking the third consecutive month of reductions. In January, home insurance premiums fell by 0.9%, according to that month’s General Insurance Price Index.
Despite recent decreases, home insurance premiums remain 2% higher than at the same time last year, reflecting the longer-term impact of inflation on pricing.
Price reductions were seen across all UK regions, with the East Midlands experiencing the largest decrease at -1.6%. Bungalows and four-bedroom properties recorded the biggest declines, both at -1.4%.
Regionally, the East Midlands recorded the largest home insurance premium decrease at -1.6%, followed by the East of England, North West, and Scotland at -1.5%. The South East, South West, Wales, and West Midlands each saw a decline of 1.3%. The North East and Yorkshire & the Humber had reductions of 1.2%, while Northern Ireland recorded a smaller decrease at -0.8%. London saw the smallest decline at -0.7%.
“The continued decline in home insurance premiums is a welcome relief for policyholders after a period of sustained inflation,” said Frances Luery, product manager at Pearson Ham Group. “The impact of recent extreme weather events has yet to be fully realised, and we may see further adjustments as claims data filters through in the coming months.”
