Prices have dropped consistently every month since April, culminating in a year-on-year reduction of -16% by December 2024 compared to the end of 2023. Motor insurance prices fell by -5.5% during Q4, contributing to a total reduction of nearly -10% in the second half of the year.
The most significant monthly reductions were observed in November and December, reinforcing the downward trajectory seen throughout the year.
Pearson Ham’s analysis shows younger drivers experienced the largest year-on-year reductions, with premiums for those under 30 dropping by almost -17%. In comparison, prices for drivers aged between 50 and 60 fell by -16%, while reductions for drivers over 60 averaged below -14%. The smallest decreases were seen among drivers over 70, whose premiums dropped by -13.4% over the year.
Despite these substantial reductions, prices remain 21.4% higher than at the start of 2020, although this figure has fallen from a peak of 46% higher towards the end of 2023. Competitive pricing strategies among insurers have played a pivotal role in driving these changes, with some opting for aggressive cuts in the latter half of the year while others maintained steadier rates following earlier reductions.
Stephen Kennedy, Director at Pearson Ham Group, commented: “The year 2024 marks a turning point in the motor insurance market, with December delivering a notable -16% year-on-year price reduction. This deflation offers much-needed relief for many policyholders, particularly younger drivers who faced some of the steepest increases in previous years. While prices remain over 21% higher than at the start of 2020, we anticipate further declines in 2025, with competitive pressures likely to drive additional reductions over the coming year.”
Home Insurance Premiums
Home insurance premiums experienced a notable shift in Q4, with competitive quoted prices declining by -1.7%. Most of this drop occurred in December, which saw a -1.3% reduction - the most substantial drop since May 2022. This marks a reversal of the modest increases observed earlier in the year, as premium inflation shows signs of subsiding.
Despite these recent reductions, prices remain nearly 12% higher than they were a year ago, reflecting the longer-term impact of premium inflation.
However, over the past two years, competitive home insurance premiums have risen by 56%, driven by challenging claims costs and frequency.
The data suggests that the levelling off observed in Q3, followed by reductions in Q4, may signal a shift in market dynamics. Insurers now appear to have more confidence to focus on growth, moving away from the steep price increases seen in recent years.
Frances Luery, Product Manager at Pearson Ham Group, commented: “The decline in home insurance prices during Q4 indicates a welcome shift in the market after prolonged periods of sharp inflation. While premiums remain significantly higher than two years ago, this recent stabilisation is a sign of things to come this year.”
Pearson Ham’s analysis highlights the evolving dynamics of the home insurance market, with signs of moderation in pricing trends after a period of significant inflation. The focus now shifts to driving growth and delivering value for policyholders in a more stable pricing environment.
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