Shopper Intelligence at this time welcomed the Monetary Conduct Authority’s (FCA) not too long ago revealed “Premium Finance Market Examine Replace Paper” (July 2025). Shopper Intelligence is delighted that the FCA’s findings align so carefully 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 big fee technique, used for round 48% of motor and residential insurance policies in 2023. For a lot of shoppers, notably these in weak teams, it’s a necessity moderately than a alternative, as they can’t afford to pay the annual charge. Shopper Intelligence’s information corroborates this, exhibiting a considerable enhance 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 shoppers 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 Charge (APR) and the precise price of premium finance. The FCA notes that sometimes, APRs for premium finance vary between 20-30%, however virtually 20% of shoppers pay over 30%. Shopper Intelligence has constantly demonstrated that APR alone may be deceptive; for instance, our information confirmed how Swinton’s APR fell from 33.80% to 26.90% on account of modifications in reimbursement construction, but the Complete Instalments Value (TIC) remained steady at 11.37%. The FCA’s remark that customers concentrate on the “whole price 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 fluctuate considerably between Motor and Dwelling insurance coverage. The FCA discovered that greater than a 3rd of dwelling insurance coverage prospects 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 prospects. Shopper Intelligence’s information 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 as a result of prevalence of 0% finance choices in Dwelling insurance coverage, supplied by 11 manufacturers, a lot of which have banking connections. Direct manufacturers typically provide 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 big income stream, accounting for roughly 20% of non-core income for each intermediaries and insurers. Admiral, as an illustration, reported £255 million in earnings from instalments and administration charges in 2024, a 55% year-on-year enhance.
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 information signifies that some insurers use month-to-month fee info as a score issue, doubtlessly rising prices for instalment customers, which aligns with the FCA’s concern.
Crucially, the FCA has indicated it’s not at present proposing blanket APR caps, mandating 0% APR, or banning fee. As a substitute, the main target shall be on difficult “APR outliers” and making certain “truthful worth”. This locations a big onus on corporations to know and justify their pricing methods.
“The FCA’s newest report validates what we have been observing for a while: the Annual Share Charge (APR) alone would not inform the total story of what shoppers 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 information permits insurers to exactly decide their market place throughout the quartiles, establish alternatives, and guarantee they’re delivering truthful worth beneath the Shopper Obligation. We’re delighted to see the FCA’s concentrate on areas our information already covers in depth.”
In a market the place charges and practices are continuously evolving, relying solely on APR or outdated information 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 shortly. Shopper Intelligence is making its up to date first quartile information for Complete Instalments Value (TIC) for this quarter accessible.
