Motor insurance premiums
Average top-5 premiums for motor insurance fell by -4% in Q2, a sharper quarterly drop than the -3.6% recorded in Q1. However, while the direction of travel remains downward, the scale of monthly reductions has become more restrained compared to late 2024.
Premiums fell by -0.8% in April, -1.7% in May and -1.6% in June, suggesting that the market may be nearing the end of the sharp correction in pricing. On a year-on-year basis, prices are now -16.4% lower than they were in June 2024.
Despite this ongoing decline, prices remain 12.3% higher than at the start of 2020, reflecting the long shadow of the pandemic, a spike in claims inflation, and subsequent pricing rebalancing.
Stephen Kennedy, Director at Pearson Ham Group, commented: “The market remains competitive and premiums are still falling, but the shape of the curve is changing. The pace of decline is slowing month by month, and that’s a signal that pricing is beginning to stabilise. What happens next will depend heavily on claims trends, consumer behaviour, and how aggressively insurers want to compete for new business in the second half of the year.”
Home insurance premiums
Premiums for combined buildings and contents cover also fell in Q2, with average top-5 prices down by -3.8% for the quarter, closely mirroring the -3.3% drop seen in Q1.
April saw a decline of -0.4%, followed by -1.9% in May and -1.5% in June. Over the past 12 months, home premiums are now -8% lower, suggesting a trend of sustained competition across the home insurance market.
However, while the short-term picture is positive for consumers, premiums remain 23.6% higher than two years ago, a legacy of the exceptional inflation that dominated 2023 and early 2024.
Frances Luery, Product Manager at Pearson Ham Group, commented: “The data shows a market that’s stabilising but still recovering from an extended period of cost inflation. Even with two consecutive quarters of falling premiums, we’re still well above 2023 levels. The challenge now is whether this downward movement has enough momentum to close that gap further – or whether we’ll soon see a floor to these reductions.”
Turning point in the market?
As both home and motor premiums continue to fall, albeit more slowly, the insurance market appears to be reaching a point of inflection. Looking ahead, Pearson Ham anticipates that pricing in both sectors will become more segmented, with outcomes varying significantly by customer profile, region and risk type.
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