Shopper Intelligence at this time 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 truthful worth in premium finance and validates Shopper Intelligence’s longstanding advocacy for clear price metrics.
The FCA’s paper highlights that premium finance is a major cost methodology, used for round 48% of motor and residential insurance policies in 2023. For a lot of customers, notably these in susceptible teams, it’s a necessity moderately than a selection, as they can’t afford to pay the annual price. Shopper Intelligence’s knowledge corroborates this, displaying 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 Proportion Fee (APR) and the precise price of premium finance. The FCA notes that usually, APRs for premium finance vary between 20-30%, however nearly 20% of customers pay over 30%. Shopper Intelligence has constantly demonstrated that APR alone could be deceptive; for instance, our knowledge confirmed how Swinton’s APR fell from 33.80% to 26.90% on account of adjustments in reimbursement construction, but the Whole Instalments Value (TIC) remained steady at 11.37%. The FCA’s statement that buyers deal with the “whole price of bundled insurance coverage and premium finance” additional reinforces the significance of TIC because the definitive measure of precise client outlay.
How Dwelling Insurance coverage Premium Finance Differs
Market dynamics additionally differ considerably between Motor and Dwelling insurance coverage. The FCA discovered that greater than a 3rd of dwelling 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, displaying 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 as a result of prevalence of 0% finance choices in Dwelling insurance coverage, provided by 11 manufacturers, a lot of which have banking connections. Direct manufacturers usually 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 considerations concerning “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 cost data as a score issue, probably rising prices for instalment customers, which aligns with the FCA’s concern.
Crucially, the FCA has indicated it isn’t presently proposing blanket APR caps, mandating 0% APR, or banning fee. As an alternative, the main target might be on difficult “APR outliers” and making certain “truthful worth”. This locations a major onus on corporations to grasp and justify their pricing methods.
“The FCA’s newest report validates what we have been observing for a while: the Annual Proportion Fee (APR) alone would not inform the complete story of what customers pay for insurance coverage instalments.
Why Whole Instalments Value (TIC) Is the Key Metric for Insurers Navigating Shopper Responsibility and Market Volatility
Our Whole Instalments Value (TIC) metric cuts by means of that complexity, offering the true image,” mentioned 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 inside the quartiles, establish alternatives, and guarantee they’re delivering truthful worth below the Shopper Responsibility. We’re delighted to see the FCA’s deal with 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 susceptible. Shopper Intelligence’s “Instalments View” and “Insurance coverage Behaviour Tracker” present the detailed, up-to-date intelligence needed for insurers to make sure Shopper Responsibility compliance, establish aggressive benefits, and adapt rapidly. Shopper Intelligence is making its up to date first quartile knowledge for Whole Instalments Value (TIC) for this quarter accessible.
