Motor and home premiums fall in Q1

According to data from the latest Pearson Ham Quarterly Market Price Index both motor and home insurance premiums saw marked price reductions in Q1 2021. Motor premiums reduced by 5%, combined buildings and contents premiums were down by 1.4%, while contents-only cover dropped by 4% in the quarter.

Pearson Ham said that while COVID-19 had been the main driver for pricing reductions throughout 2020 and into the start of 2021, the Financial Conduct Authority’s pricing remedies would influence pricing dynamics in the months ahead.

Stephen Kennedy, director, insurance pricing at Pearson Ham, said: “Up until September 2021 we expect to see insurers jockeying for position using ‘land grab’ price reduction strategies to drive business acquisition ahead of the new rules.

“During the summer, if we are in a position where restrictions and lockdowns have eased and claims levels start to increase, we expect there to be a levelling off in pricing. Then, from September when some of the initial price remedies governance frameworks are introduced, we expect insurers to make final refinements to their models as they digest how their peers and the market is responding. The moves to rebalance new and renewal business pricing will see increases starting to be implemented from October onwards.

“Moving into 2022, we will see the scale of variances in premiums that will inevitably impact on retention levels and increased shopping around by customers. It may not be until 2023 before we see more pricing stability.”

Image courtesy Jaguar Land Rover

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