Predictions by PwC UK point to a likely decrease in the cost of home and motor insurance this year.
“For 2021, due to the economic impact of the pandemic and competition in the home and motor market, we are forecasting insurance premiums to drop by 5%-10% for those who shop around for motor insurance and 4%-8% for those who shop around for home insurance,” said Mohammad Khan, general insurance leader at PwC UK.
“Conversely, there may be greater reductions in renewal premiums for customers who have stayed with an insurer for a number of years. However, these estimates exclude the impact of the FCA reforms which may not be introduced in 2021.”
Khan was referring to changes to pricing practices expected to be rolled out by the Financial Conduct Authority (FCA) either late this year or early next year. Under new rules, motor and home insurance prices will be mandated to be the same for both existing and new policyholders.
Khan explained: “If the reforms on market pricing are introduced in 2021, the cost of the reduction in renewal premiums for customers who have stayed with an insurer for a number of years may be borne by those customers who use price comparison websites.
“This is because the renewal reduction will be funded by the abolition of discounts that are currently available to drivers who shop around each year.”
Meanwhile the current UK lockdown will see a continuation of the trend of fewer road crashes, which affects personal motor insurance, while theft claims on home policies have also dropped amid work-from-home arrangements among employees.
