Car and home customers have seen significant savings of over £100 million in the past year due to reductions in the cost insurers charge to pay in instalments driven by increasing competition and regulatory pressure, according to new data from Consumer Intelligence.
Analysis by Consumer Intelligence, which tracks consumer insurance costs through its Insurance Behaviour Tracker, shows the average total instalment cost on top of paying in a lump sum has fallen significantly to 10.1% from 11.3% in the past year. Consumer Intelligence is urging consumers and providers to focus on the Total Instalment Cost (TIC) instead of APRs, which can be much higher. It warns that vulnerable customers are particularly at risk of being misled.
Its Consumer Intelligence Behaviour Tracker monitors the reported cost of insurance customers pay for car and home cover, and they track the difference between paying in a lump sum and instalments. Average premiums for both have started to fall recently, but price rises in the past have meant millions of drivers and homeowners have switched to instalments.
Consumer Intelligence data shows that the number of people using instalments for motor insurance has risen from 25% - around 7.5 million vehicles in late 2021 - to 42% - around 12.6 million vehicles by late 2024. Home contents and buildings insurance increased from 31%—5.8 million homes—to 46%—8.62 million homes during the same period.
Car insurance customers now pay an average of just 10.1% extra, down from 11.3% last year. Paying by instalments saves consumers approximately £82.4 million, or £6.54 per insured vehicle annually. Similarly, home insurance instalment costs fell from 9.1% to 8.1%, resulting in savings of nearly £24 million, or approximately £2.78 per household.
UK consumers are saving around £106.3 million per year due to these changes.
To continue educating consumers and insurers on instalment payments' true costs and benefits, Consumer Intelligence has declared April as "APR Awareness Month." This campaign aims to correct common misconceptions around Annual Percentage Rates (APR) and emphasise the importance of looking at the Total Instalment Cost (TIC) instead.
Ian Hughes, CEO of Consumer Intelligence, said: "Focusing solely on APR can mislead consumers, particularly vulnerable customers who rely heavily on instalment payments. APR Awareness Month will clarify the real costs and encourage insurers to keep instalment charges transparent and fair. With Consumer Duty regulations coming this summer, the industry and consumers must understand these distinctions clearly."
Throughout April, Consumer Intelligence will release a series of insights into deposits, instalment options, credit availability, and overall affordability. At the end of the month, a comprehensive report summarising key findings will be published. Consumers and insurers seeking immediate insights can contact Consumer Intelligence directly for detailed information on where their insurance instalment charges stand within the market.
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