Motor insurance premiums in the UK experienced a sharp decline in the final quarter of 2024, alongside a drop in home insurance premiums, according to the latest General Insurance Price Index from Pearson Ham Group.
Motor insurance premiums see sharp decline in Q4 2024
Motor insurance prices dropped consistently throughout the year, with a year-on-year reduction of 16% by December, compared to December 2023.
In Q4 alone, premiums fell by 5.5%, contributing to an overall decrease of nearly 10% in the second half of the year. The most significant monthly reductions were recorded in November and December, reinforcing the broader downward trend.
The analysis highlighted that younger drivers saw the most substantial decreases in premiums. Those under 30 experienced a nearly 17% drop in their insurance costs. In contrast, drivers aged 50 to 60 saw reductions of 16%, while drivers over 60 experienced an average decrease of below 14%. The smallest reductions were observed in drivers aged 70 and above, whose premiums fell by 13.4%.
Despite the significant declines, motor insurance prices remain 21.4% higher than at the beginning of 2020, although this is a notable improvement from the peak of 46% higher observed in late 2023.
Insurers have been employing a range of competitive pricing strategies, with some opting for more aggressive cuts in the second half of the year, while others have kept rates more stable after earlier reductions.
Pearson Ham Group director Stephen Kennedy said the year 2024 marked a turning point in the motor insurance market. He pointed out that the 16% drop in December offers much-needed relief to many policyholders, particularly younger drivers who had previously faced sharp price hikes.
"While prices remain over 21% higher than at the start of 2020, we anticipate further declines in 2025, with competitive pressures likely to drive additional reductions over the coming year,” said Kennedy.
In the home insurance market, premiums saw a notable shift in Q4, with quoted prices dropping by 1.7%.
December alone accounted for a 1.3% decrease, the largest drop since May 2022. This marks a reversal from the price increases earlier in the year, suggesting a slowdown in premium inflation. However, despite the recent declines, home insurance prices remain nearly 12% higher than they were a year ago, reflecting the long-term impact of premium inflation.
According to Pearson Ham Group product manager France Luery, the decline in home insurance prices in Q4 signals a shift in the market after a prolonged period of steep price increases.
"While premiums remain significantly higher than two years ago, this recent stabilisation is a sign of things to come this year,” said Luery.
As both motor and home insurance markets undergo shifts, will this new pricing trend continue into 2025? Share your opinion in the comments.
