Shopper Intelligence right now welcomed the Monetary Conduct Authority’s (FCA) just lately revealed “Premium Finance Market Research Replace Paper” (July 2025). Shopper Intelligence is delighted that the FCA’s findings align so intently with its analysis and evaluation on premium finance, which was initially revealed in April. The report highlights the rising regulatory emphasis on honest worth in premium finance and validates Shopper Intelligence’s longstanding advocacy for clear value metrics.
The FCA’s paper highlights that premium finance is a major fee methodology, used for round 48% of motor and residential insurance policies in 2023. For a lot of customers, significantly these in weak teams, it’s a necessity reasonably than a selection, as they can not afford to pay the annual price. Shopper Intelligence’s knowledge corroborates this, exhibiting a considerable improve of over 10 proportion factors in instalment utilization in each Motor and Dwelling insurance coverage between 2022 and 2024, with over two-fifths of UK customers now opting to pay month-to-month.
Why APR Is Deceptive
A key takeaway from the FCA’s report, and a central tenet of Shopper Intelligence’s analysis, is the disparity between Annual Share Price (APR) and the precise value of premium finance. The FCA notes that sometimes, APRs for premium finance vary between 20-30%, however virtually 20% of customers pay over 30%. Shopper Intelligence has constantly demonstrated that APR alone will be deceptive; for instance, our knowledge confirmed how Swinton’s APR fell from 33.80% to 26.90% resulting from adjustments in compensation construction, but the Complete Instalments Value (TIC) remained secure at 11.37%. The FCA’s commentary that buyers give attention to the “complete value of bundled insurance coverage and premium finance” additional reinforces the significance of TIC because the definitive measure of precise shopper outlay.
How Dwelling Insurance coverage Premium Finance Differs
Market dynamics additionally range considerably between Motor and Dwelling insurance coverage. The FCA discovered that greater than a 3rd of house insurance coverage clients pay the identical quantity for month-to-month funds as they do for annual charges, in contrast with lower than 3% of motor insurance coverage clients. Shopper Intelligence’s knowledge confirms this, exhibiting that the typical TIC for Dwelling insurance coverage is decrease at 8.1%, in comparison with 10.1% for Motor Insurance coverage. That is partly because of the prevalence of 0% finance choices in Dwelling insurance coverage, supplied by 11 manufacturers, a lot of which have banking connections. Direct manufacturers typically supply decrease TICs than intermediaries (Motor: 8.6% vs. 11.3%; Dwelling: 6.1% vs. 9.3%), highlighting distinct enterprise fashions and income methods. Premium finance is a major income stream, accounting for about 20% of non-core income for each intermediaries and insurers. Admiral, as an example, reported £255 million in earnings from instalments and administration charges in 2024, a 55% year-on-year improve.
FCA Targets APR Outliers and “Double Dipping”
The FCA additionally addressed issues relating to “double dipping,” the place the choice to pay month-to-month could have an effect on the underlying insurance coverage premium. Shopper Intelligence’s knowledge signifies that some insurers use month-to-month fee data as a score issue, probably rising prices for instalment customers, which aligns with the FCA’s concern.
Crucially, the FCA has indicated it’s not at the moment proposing blanket APR caps, mandating 0% APR, or banning fee. As an alternative, the main target can be on difficult “APR outliers” and guaranteeing “honest worth”. This locations a major onus on companies to grasp and justify their pricing methods.
“The FCA’s newest report validates what we have been observing for a while: the Annual Share Price (APR) alone does not inform the complete story of what customers pay for insurance coverage instalments.
Why Complete Instalments Value (TIC) Is the Key Metric for Insurers Navigating Shopper Obligation and Market Volatility
Our Complete Instalments Value (TIC) metric cuts by that complexity, offering the true image,” stated Ian Hughes, CEO at Shopper Intelligence. “In a dynamic market, understanding your aggressive place by TIC – not simply APR – is essential. Our knowledge allows insurers to exactly decide their market place throughout the quartiles, establish alternatives, and guarantee they’re delivering honest worth underneath the Shopper Obligation. We’re delighted to see the FCA’s give attention to areas our knowledge already covers in depth.”
In a market the place charges and practices are continually evolving, relying solely on APR or outdated knowledge leaves insurers weak. Shopper Intelligence’s “Instalments View” and “Insurance coverage Behaviour Tracker” present the detailed, up-to-date intelligence obligatory for insurers to make sure Shopper Obligation compliance, establish aggressive benefits, and adapt rapidly. Shopper Intelligence is making its up to date first quartile knowledge for Complete Instalments Value (TIC) for this quarter out there.
