Motor insurance premiums continued to slide in the third quarter of 2024 while home insurance prices saw a slight increase, according to Pearson Ham Group’s General Insurance Price Index.
The latest index showed a further 4.4% drop in competitive prices for motor insurance. The steepest decline was recorded in August, with premiums decreasing by 1.9%. This marks the second consecutive quarter of falling prices, amounting to a cumulative 9.6% reduction over the past six months.
Also, for the first time, year-over-year deflation was noted, as September 2024 motor insurance prices were 8.5% lower than they were a year ago.
Pearson Ham Group said insurers have employed different pricing approaches over the past year. Some of the largest price cuts were seen in the last quarter from companies that opted to reduce rates more aggressively in recent months.
Others, having already lowered premiums earlier in the year, have mostly kept prices steady or introduced slight increases in the third quarter.
Meanwhile, despite the recent deflationary trend, prices remain significantly higher than pre-pandemic levels. Compared to early 2020, premiums are still 28.4% higher, although this is down from a peak where prices had surged 46% by late 2023.
Pearson Ham Group director Stephen Kennedy (pictured) highlighted: “Q3 marks the first instance of year-on-year price deflation in the motor insurance market for a considerable period of time. Yet, despite recent drops, prices are still nearly 30% above where they were at the start of 2020.
“We anticipate this trend will persist into Q4, with motor insurance pricing expected to decrease further, resulting in a potential 11-14% drop over the course of the full year. This will offer many vehicle owners some relief amid the broader rise in living costs.”
In the home insurance space, the third quarter recorded a 0.6% rise in prices, following earlier reductions in July, stability in August, and a small sub-1% increase in September.
Over the last six months, competitive home insurance premiums have grown by 3.4%. Although this is a notable increase, it suggests a slowing pace of inflation compared to the sharp rises seen in recent years.
Currently, according to Pearson Ham Group, home insurance premiums are 22.5% higher than in the same period last year. More broadly, home insurance prices have surged by 63.3% since 2022.
“The levelling off of home insurance prices in recent months signals the end of the sharp increases we’ve seen previously,” noted Frances Luery, product manager at Pearson Ham Group. “That said, we still expect prices to rise by another 13% to 16% by December 2024 compared to December 2023.”
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