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UK motor premiums set to rise as pricing measures kick in

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Motor premiums in the UK fell 8.4% in the last 12 months, pushed down by an uptick in competitive telematics offerings and push for market share, according to data analytics firm Consumer Intelligence.

The firm says the decline means the average motor premium is now about £779 ($1444) annually.

But the downward trend is likely to end in the coming months as new rules such as banning loyalty penalties kick in on January 1, the firm says.

“We are seeing a downward trend for premiums across the board - in all of our age and regional segments - and it’s not just the uptick in telematics quotes behind the plummeting premiums,” Product Manager Harriet Devonald said.

“With the [Financial Conduct Authority’s] pricing remedies coming in at the end of the year, some brands are looking to gain volume while they can.

“Others, who benefited from a quiet year of motor claims in 2020, have been able to pass savings onto customers, whilst other brands are following the market downward in order to remain competitive.

“It’s unlikely that this trajectory will continue as we move through the second half of the year. Once the new regulation takes force, we are likely to see a hardening market once more.”

The Financial Conduct Authority says the move to ban home and motor loyalty penalties and other pricing measures will save UK consumers £4.2 billion ($7.8 billion) over 10 years.