Client Intelligence right now welcomed the Monetary Conduct Authority’s (FCA) not too long ago printed “Premium Finance Market Research Replace Paper” (July 2025). Client Intelligence is delighted that the FCA’s findings align so carefully with its analysis and evaluation on premium finance, which was initially printed in April. The report highlights the growing regulatory emphasis on honest worth in premium finance and validates Client Intelligence’s longstanding advocacy for clear price metrics.
The FCA’s paper highlights that premium finance is a major fee technique, used for round 48% of motor and residential insurance policies in 2023. For a lot of customers, significantly these in susceptible teams, it’s a necessity somewhat than a alternative, as they can not afford to pay the annual price. Client Intelligence’s information corroborates this, exhibiting a considerable enhance of over 10 proportion factors in instalment utilization in each Motor and House 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 Client Intelligence’s analysis, is the disparity between Annual Proportion Price (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 customers pay over 30%. Client Intelligence has persistently demonstrated that APR alone will be deceptive; for instance, our information confirmed how Swinton’s APR fell from 33.80% to 26.90% on account of adjustments in reimbursement construction, but the Whole Instalments Price (TIC) remained steady at 11.37%. The FCA’s commentary that customers give attention to 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 House Insurance coverage Premium Finance Differs
Market dynamics additionally differ considerably between Motor and House insurance coverage. The FCA discovered that greater than a 3rd of house 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. Client Intelligence’s information confirms this, exhibiting that the common TIC for House insurance coverage is decrease at 8.1%, in comparison with 10.1% for Motor Insurance coverage. That is partly because of the prevalence of 0% finance choices in House insurance coverage, supplied by 11 manufacturers, lots of which have banking connections. Direct manufacturers usually provide decrease TICs than intermediaries (Motor: 8.6% vs. 11.3%; House: 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 illustration, reported £255 million in revenue from instalments and administration charges in 2024, a 55% year-on-year enhance.
FCA Targets APR Outliers and “Double Dipping”
The FCA additionally addressed issues relating to “double dipping,” the place the choice to pay month-to-month could have an effect on the underlying insurance coverage premium. Client Intelligence’s information signifies that some insurers use month-to-month fee data as a score issue, probably growing 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 focus can be on difficult “APR outliers” and guaranteeing “honest 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 Price (APR) alone would not inform the complete story of what customers pay for insurance coverage instalments.
Why Whole Instalments Price (TIC) Is the Key Metric for Insurers Navigating Client Obligation and Market Volatility
Our Whole Instalments Price (TIC) metric cuts by way of that complexity, offering the true image,” mentioned Ian Hughes, CEO at Client 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 honest worth beneath the Client Obligation. We’re delighted to see the FCA’s give attention to areas our information already covers in depth.”
In a market the place charges and practices are continually evolving, relying solely on APR or outdated information leaves insurers susceptible. Client Intelligence’s “Instalments View” and “Insurance coverage Behaviour Tracker” present the detailed, up-to-date intelligence crucial for insurers to make sure Client Obligation compliance, establish aggressive benefits, and adapt rapidly. Client Intelligence is making its up to date first quartile information for Whole Instalments Price (TIC) for this quarter obtainable.
