The latest Quarterly Insurance Price Index from Pearson Ham Group has identified significant motor and home insurance price increases in the last quarter creating an unprecedented rise in pricing in the last year.

In motor, the third quarter’s increase of 16% and y-o-y increase of 46% in pricing are the largest quarterly and yearly increases since the Index began in its current format. Motorists were quoted an average insurance price of £531 in September, which equates to an increase of 16% through the quarter. The highest increase seen for an individual motorist within the analysis was 82%.

Combined buildings and contents policies also experienced an exceptional surge, with prices soaring by 10% in the third quarter alone, resulting in an annual increase of 33%. The average movement of 33% over the past 12 months masks larger increases for individual home owners seeking combined buildings and contents cover, according to the report’s authors. This highest increase seen within the analysis was 96% compared to twelve months ago.

Most of the premium inflation (19% of the total 33%) seen in the last year for combined home insurance took place in the last six months. As with motor insurance, there was a peak in July with a flattening of rate increases since then. The flattening of rates from July is indicative. Certainly, there is concern at the level of claims and the frequency of claims, but there are signals that the inflationary pressure is easing.

Commenting on the findings, Stephen Kennedy of Pearson Ham Group, said: “A surge of 46% in motor insurance pricing and 33% for combined buildings and home insurance in the last year has been unprecedented. However, looking ahead, we anticipate that the current trend of price increases will likely stabilise in the upcoming year, reflective of the evolving competitive landscape.

“While it's customary for average premiums to experience seasonal reductions in the new year, significant price drops may not materialise until insurers feel more at ease in the changed environment. For the first half of 2024, we can expect a period of relative stability, with the potential for heightened competition contingent upon any shifts in costs.

“It appears that we have reached the peak of the pricing cycle, a phase inevitably succeeded by a decline in motor and home insurance pricing. The only question remains when will this transition occur.”

The Pearson Ham analysis undertakes a like-for-like comparison of the state of insurance pricing each month, only using the most competitive quotes received to reduce bias.

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