The FCA’s latest Premium Finance Market Study update, released today, has rightly grabbed the industry's attention. It highlights an issue that Consumer Intelligence has been discussing for a while: the critical importance of how insurers charge for monthly instalments and how clearly they communicate these costs to customers.
In our recent Instalments Insight Report, we analysed how UK insurers structure their premium finance offerings and benchmarked these using a key measure: Total Instalments Cost (TIC). The FCA’s new update aligns closely with our findings, emphasising TIC’s role as the fairest way to reflect the actual consumer cost of premium finance.
APR alone doesn't tell the whole story
One key point from the FCA’s report reinforces our stance: APR is a flawed benchmark when it comes to insurance premium finance. While the FCA found that around 60% of customers face APRs of 20%-30%, they also highlighted significant confusion and variation. In one example we analysed, a major insurer reduced their APR from 33.8% to 26.9%, but the Total Instalments Cost (TIC) remained at 11.37%.
This highlights the problem: APR changes, yet customers pay the same. That's why we have consistently urged insurers to measure, and benchmark based on TIC, a figure consumers see and pay.
Motor vs Home: A tale of two markets
The FCA’s paper confirms another key insight from our research: the striking difference between Motor and Home insurance. According to the FCA, fewer than 3% of Motor insurance customers receive 0% finance options, compared to more than a third in home insurance.
Our data aligns with this trend. The average TIC in Home insurance (around 8.1%) is notably lower than Motor (10.1%), primarily driven by the prevalence of 0% offers from banks and direct insurers.
Why the difference? Banks and direct providers are more easily able to offset costs within their broader customer relationships, underscoring the importance of effective distribution strategies for achieving a competitive advantage.
A market under scrutiny
The FCA report emphasises that premium finance generates substantial margins for some insurers, sometimes making up aa substantial part of non-core revenue. This is not inherently negative; it’s how these revenues are structured, justified, and transparently communicated that matters.
We’ve long argued that transparency and fairness must underpin premium finance offerings, especially now under the Consumer Duty framework. Insurers must be prepared to explain and justify their instalment pricing clearly, with solid benchmarking data to support it.
The first TIC quartile: Which insurers set the bar?
We are updating the exclusive insights from our
Total Instalments Cost Report, naming the insurers who rank within the first quartile for TIC in both Home and Motor insurance.
These are the firms setting the benchmark for fairness and clarity, offering the best value to customers who pay monthly instalments. These insurers understand that competitive advantage doesn’t just come from pricing the annual premium low, but from transparently structuring monthly payments so that customers see and feel the value.
If you are not in the first quartile but you want to know how you performed just
click on this link, ask and
we will send you over your Quartile positioning, for free!
Total Instalment Cost (TIC) - First Quartile Ranking
|
| Motor Insurance Provider |
Home Insurance Provider |
| 1st Central Plus |
Aviva |
| 1st Central Premier |
Aviva Premium |
| 1st Central Standard |
AXA Home |
| Admiral |
AXA HomePlus |
| Admiral Essential |
AXA HomePremier |
| Admiral Gold |
Halifax |
| Admiral LittleBox |
John Lewis Bronze |
| Admiral MultiCar |
John Lewis Gold |
| Admiral Platinum |
John Lewis Silver |
| Aviva |
M&S |
| Aviva Premium |
MBNA |
| Aviva Zero |
MBNA Plus |
| AXA |
Nationwide |
| Axa Plus |
Nationwide Plus |
| Collingwood |
QuoteMeHappy Ess Plus |
| Diamond |
QuoteMeHappy Essentials |
| Elephant |
QuoteMeHappy Premier |
| Ford |
Sainsburys |
| General Accident |
Sainsburys Home Plus |
| Lloyds Bank Gold |
Santander Classic |
| Lloyds Bank Silver |
Santander Plus |
| LV |
Sky |
| LV Extra |
Swiftcover Home |
| LV Plus |
Swiftcover HomePlus |
| Marshmallow Essential |
|
| Marshmallow Go |
|
| Marshmallow Lightest |
|
| Marshmallow Original |
|
| Marshmallow Plus |
|
| Moja |
|
| Moja Essentials |
|
| One Call Pay As You Drive |
|
| One Click |
|
| One Protect |
|
| Prima |
|
| QuoteMeHappy Connect |
|
| QuoteMeHappy Connect Plus |
|
| QuoteMeHappy Connect Premier |
|
| QuoteMeHappy Essentials |
|
| QuoteMeHappy Plus |
|
| QuoteMeHappy Plus Roadside |
|
| QuoteMeHappy Plus with Legal |
|
| QuoteMeHappy Premier |
|
| Sainsburys |
|
| Sainsburys Essentials |
|
| Sainsburys Plus |
|
| Swiftcover |
|
| Swiftcover Plus |
|
| Ticker Pay per mile |
|
| Yoga Insure |
|
What should insurers do next?
This latest FCA report isn't just another regulatory update. It's a clear signal that insurers who continue to rely solely on APR, or fail to benchmark themselves against competitors using TIC, will find themselves increasingly vulnerable not just commercially, but also from a regulatory perspective.
If you're not sure where your brand stands, the time to act is now. Insurers must ensure they:
- Benchmark TIC regularly against the market.
- Understand precisely how their pricing strategies impact visibility and competitiveness.
- Proactively justify the value they deliver to regulators and customers