Car insurance pricing has become increasingly complex as insurers have adopted richer data sources and more advanced modelling techniques. The premium a consumer receives is now shaped by thousands of interacting variables - behavioural, geographic, economic and competitive.
Yet the market is still typically analysed as if it were a single homogenous population - an assumption that increasingly distorts how pricing movement is interpreted.
While 2025 saw overall deflation, headline metrics risk obscuring the competitive structure beneath. What appears to be a single market is in reality a collection of structurally distinct micro-markets, each responding differently to growth ambition, margin pressure and exposure management. As a result, the experience of deflation was uneven: some consumers saw sharp reductions, while others experienced relative stability despite a softening market.
Headline metrics like average premiums or year-on-year rate movement flatten the nuance that drives real pricing outcomes. Different products compete in different ways across these micro-markets, each balancing growth, margin and exposure. A flat market can mask significant movement beneath the surface, as opposing forces play out across different segments.
To make this structure visible, Consumer Intelligence has applied clustering techniques to our daily price benchmarking data. Rather than analysing the market as one blended population, clustering groups risks into behaviourally and commercially coherent segments based on observable pricing patterns. This approach preserves competitive structure, enabling analysis that reflects how insurers actually compete, rather than smoothing away the differences that shape pricing strategy.
At a headline market level, the median of the five most competitive quotes per risk fell from £617 in January 2025 to £566 in December 2025 - an 8.2% reduction. When viewed through eight driver clusters, the experience of deflation was far from uniform. Older homeowner couples saw the sharpest decline, with median premiums falling from £465 to £398 (-14.4%), significantly steeper than the headline. Low-mileage claimers (-12.6%) and new professional couples (-11.7%) also saw reductions well above the market average.
At the other end of the spectrum, younger drivers saw mixed outcomes across 2025. Younger consumers insured on single-driver policies saw median premiums fall from £837 to £767 (-8.4%). However, median premiums for younger couples remained stable at around £800, increasing slightly by 0.4% in a softening market. This stability suggests sustained pricing caution in segments where exposure and claims behaviour may be perceived as less predictable.
The same pattern emerges geographically. Areas with high concentrations of university students saw the largest reduction, shaped in part by increased competitiveness in telematics propositions. Urban singles & renters (-10.1%) and deprived working communities (-10.2%) also experienced above-average deflation. By contrast, working homeowner neighbourhoods (-4.3%) and rural & farming communities (-5.8%) saw more modest movement, indicating firmer pricing gravity in lower-density, more stable postcodes.
Taken together, the story of 2025 is not simply that premiums fell. It’s that pricing intensity was redistributed. The market did not move as one homogenous population. Clustering makes that structure visible, showing not just what changed, but where it mattered, and for whom.
In a market that no longer moves as one, relying on headline averages risks misreading competitive intensity.
Consumer Intelligence’s clustering approach helps insurers see where pricing pressure is building, where it is easing, and which segments are driving the shift.
If you’d like to understand how this view could strengthen your pricing or growth strategy, get in touch with our team here: