Client Intelligence right now welcomed the Monetary Conduct Authority’s (FCA) just lately printed “Premium Finance Market Research Replace Paper” (July 2025). Client Intelligence is delighted that the FCA’s findings align so intently 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 value metrics.
The FCA’s paper highlights that premium finance is a big fee methodology, used for round 48% of motor and residential insurance policies in 2023. For a lot of customers, significantly these in weak teams, it’s a necessity relatively than a alternative, as they can not afford to pay the annual payment. Client Intelligence’s knowledge corroborates this, displaying a considerable enhance of over 10 share factors in instalment utilization in each Motor and Residence 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 Share Charge (APR) and the precise value of premium finance. The FCA notes that usually, APRs for premium finance vary between 20-30%, however nearly 20% of customers pay over 30%. Client Intelligence has constantly demonstrated that APR alone will be deceptive; for instance, our knowledge confirmed how Swinton’s APR fell from 33.80% to 26.90% as a result of adjustments in reimbursement construction, but the Whole Instalments Price (TIC) remained secure at 11.37%. The FCA’s remark that buyers deal with the “complete value of bundled insurance coverage and premium finance” additional reinforces the significance of TIC because the definitive measure of precise shopper outlay.
How Residence Insurance coverage Premium Finance Differs
Market dynamics additionally fluctuate considerably between Motor and Residence insurance coverage. The FCA discovered that greater than a 3rd of residence 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 knowledge confirms this, displaying that the common TIC for Residence insurance coverage is decrease at 8.1%, in comparison with 10.1% for Motor Insurance coverage. That is partly as a result of prevalence of 0% finance choices in Residence insurance coverage, provided by 11 manufacturers, lots of which have banking connections. Direct manufacturers typically provide decrease TICs than intermediaries (Motor: 8.6% vs. 11.3%; Residence: 6.1% vs. 9.3%), highlighting distinct enterprise fashions and income methods. Premium finance is a big income stream, accounting for about 20% of non-core income for each intermediaries and insurers. Admiral, for example, 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 knowledge signifies that some insurers use month-to-month fee info as a score issue, probably growing prices for instalment customers, which aligns with the FCA’s concern.
Crucially, the FCA has indicated it’s not at present proposing blanket APR caps, mandating 0% APR, or banning fee. As an alternative, the main target will likely be on difficult “APR outliers” and guaranteeing “honest worth”. This locations a big onus on corporations to know and justify their pricing methods.
“The FCA’s newest report validates what we have been observing for a while: the Annual Share Charge (APR) alone does 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 that complexity, offering the true image,” stated Ian Hughes, CEO at Client Intelligence. “In a dynamic market, understanding your aggressive place by TIC – not simply APR – is essential. Our knowledge permits insurers to exactly decide their market place inside the quartiles, establish alternatives, and guarantee they’re delivering honest worth below the Client Obligation. We’re delighted to see the FCA’s deal with areas our knowledge already covers in depth.”
In a market the place charges and practices are always evolving, relying solely on APR or outdated knowledge leaves insurers weak. Client Intelligence’s “Instalments View” and “Insurance coverage Behaviour Tracker” present the detailed, up-to-date intelligence essential for insurers to make sure Client Obligation compliance, establish aggressive benefits, and adapt rapidly. Client Intelligence is making its up to date first quartile knowledge for Whole Instalments Price (TIC) for this quarter obtainable.
