Market research firm finds that premiums in these lines of business have experienced the biggest one-month jump in eight years as a result of the FCA eliminating price walking

EXCLUSIVE: The FCA’s general insurance pricing reform, which came into effect from 1 January 2022, has led to the biggest month-on-month increase in home and motor insurance premiums in over eight years, according to exclusive analysis from market research firm Consumer Intelligence.

Its latest data - published this month (February 2022) - which reviews average insurance premium movements across the four biggest price comparison websites as well as key direct insurers, found that home insurance premiums increased by 9.1% in January 2022, with average annual premiums for this line of business now sitting at £154.

Motor insurance premiums, meanwhile, rose by 4.9% over the last month, leading to an average annual premium of £705 for UK motorists.

These findings contrast Consumer Intelligence’s last batch of data, which was published at the end of 2021 – this revealed falling premiums, with home insurance dropping 8.2% year-on-year and motor cover reducing by 7.6% over the same reporting period.

Michael Miskelly, market insight expert at Consumer Intelligence, described “January’s uptick in premiums” as “stark” and attributed the increases to the FCA’s new pricing rules, which scrapped price walking.

Price walking, also known as dual pricing or the loyalty penalty, is when new insurance customers are offered more competitive premiums compared to existing, renewing customers looking to obtain the same cover.

‘One-time step change’

Miskelly continued: “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.

“Many have asked us whether premiums will continue to rise. The answer is yes, but not as a continued reaction to the new regulations. The large increase seen in January was a one-time step change, signifying the industry’s move to become compliant with the new rules.

“Over the coming months, we will most likely see premium fluctuation at a brand level as providers jostle to find their place in the new competitive landscape.

“However, over the next year, underlying upward pressure on costs will likely see both markets harden and consumers pay more for their motor and home insurance. Factors contributing to this include the rising cost of motor repairs and parts, building materials and labour, among other things.”

The analysis also found:

  • In the 12 months to January 2022, the average premium for home insurance rose 2.9% and the average premium for motor insurance decreased by 2.8%.
  • Since February 2014, the average premium for home insurance has risen a modest 2.7.%.
  • Since October 2013, the average premium for motor insurance has risen 17%.
  • Homeowners aged over 50 have seen their home insurance premiums increase by 5.8% in the 12 months to January 2022 – premium prices for this demographic shot up by 10.9% in January 2022 alone. This age group now pay £161 on average for annual home cover.
  • Drivers under the age of 25 experienced the largest premium decrease in the 12 months to January 2022, with motor premiums for this age group falling by 12.2% over the course of last year. However, this demographic still pays the most for their motor cover, with an annual policy costing £1,496 on average.


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