Maybe Insurance Brands Need to Rethink Their Installment Plan APRs?

It’s a valid point, if only to head off action by the regulator in the UK, as consumers find APR rates of over 25% on some motor premiums. Here’s the word from Consumer Intelligence;

Insurers need to adopt Total Instalment Costs (TIC) instead of APR to manage risk  and competitiveness as home and motor customers increasingly pay monthly, a new report from Consumer Intelligence says.

Its Instalments in 2025 – The Real Cost of Paying Monthly, highlights how TIC is the measure customers see on price comparison websites and how quotes are ranked as well as how regulators assess fairness under Consumer Duty.  Currently more than 40% of insurance customers pay monthly for cover and the number is continuing to rise meaning that TIC is the benchmark that matters most, Consumer Intelligence says. It has developed the Consumer Intelligence TIC Quartile Model as a simple, structured way for home and motor insurers to understand their premium finance market position based on four quartiles.

Analysis shows providers in Q1 charge the lowest TIC and are the most competitive while those in Q4 charge the highest TIC and are the least competitive or least transparent.  Key criteria include deposit sizes, number of monthly payments and the price difference for customers paying monthly and annually

Data shows most major retail banks are in Q1 for home insurance offering 0% while intermediary driven brands tend to be in Q3 or Q4. Providers in Q3 and Q4 are meaningfully higher than a significant portion of the market.  In motor insurance Q1 ranges from 0% to 8.1% with Q2 ranging from 8.2% to 10.4%.

Zero per cent offers are virtually non-existent in motor while retail banks and white label partners tend to offer 0% in home. Providers in Q1 and Q2 in home are under intense competitive pressure.

Younger drivers under 35 tend to face higher TICs as their premiums are higher and they have lower credit scores generally. Older homeowners tend to have lower TICs and are less tolerant of opaque pricing.

Consumer Intelligence’s insights are based on thousands of live PCW quotes, extensive customer behaviour data, and years of hands-on work helping insurers improve pricing strategy, competitiveness, and compliance.