The Financial Conduct Authority’s (FCA) new pricing rules that commenced in January 2022 have resulted in the most dramatic one-month jump in home and motor insurance premiums in over eight years, according to market researcher Consumer Intelligence’s analysis in its latest insurance price indices.
Consumer Intelligence’s indices provide an aggregated view of average insurance premium movements across the big four price comparison websites and key direct insurers.
In its latest data, the market researcher found that the average premium for home insurance dramatically increased by 9.1% and motor insurance by 4.9% in January 2022, with the average premium now sitting at £154 for the former and £705 for the latter.
“January’s uptick in premiums is stark. Insurers now have to offer the same prices and incentives to renewing customers as they would for an equivalent new customer,” said Consumer Intelligence market insight expert Michael Miskelly.
In previous market updates published towards the end of 2021, Consumer Intelligence showed that the cost of insurance at that time was falling an average of 8.2% year-on-year for homeowners and 7.6% for drivers.
Commenting on the previous results, Miskelly said: “We fully expected premiums to rise as a result of the new pricing regulations; it was simply a question of how much. We also predicted the larger increase in home insurance. Up until now, the home market has been a beneficiary of high levels of loyalty, but also prone to more extensive price walking.”
Considering the latest data, Consumer Intelligence expects premium fluctuation at the brand level as providers jostle to find their place in the new competitive landscape. However, over the next year, it expects the underlying upward pressure on costs to see both markets harden while consumers pay more for their motor and home insurance due to the rising cost of motor repairs and parts, building materials and labour, among other things.
