The latest car and home insurance premium data from Pearson Ham shows a gradual decrease across the board, which is a stark contrast to the `noise’ on social media channels from consumers and business owners. The end user claims they are seeing premiums rise, especially on motor, despite making no claims and FCA regs on loyalty being rewarded, being implemented across the Motor sector. The reality could be that specific postcode locations, or driver profiles mean higher than average premiums, caused by theft, organised crash-for-cash, localised arson/vandalism incidents etc. The move towards EV vehicles also means more costs on salvage, repairs and storage of battery packs, so that will skew premiums at the luxury hybrid/EV end of the car market.
Here’s the word;
Insurance premiums for both motor and home insurance continued to fall in Q4 2025, albeit at a much slower pace than earlier in the year, according to Pearson Ham Group’s latest General Insurance Price Index.
The average motor insurance premium declined by -1.4% over Q4, a marked deceleration compared to the -4% and -3% quarterly drops recorded in Q2 and Q3 of 2025. Home insurance premiums edged down only -0.8% in Q4, after falling nearly -3.8% in Q2 and -4.9% in Q3.
These latest quarterly decreases extend a trend of competitive premium-cutting that began at the start of 2024 but the data also points to an increasingly stabilised market in that the rate of decline in premiums has slowed to a crawl, suggesting pricing may be nearing its floor as insurers pull back.
Motor insurance
Motor insurance premiums have now fallen for eight consecutive quarters, but Q4’s -1.4% drop was the smallest since early in this cycle. Month-on-month reductions in October, November, and December 2025 were on the order of only around half a percent or less, a gentler rhythm than the declines seen through the summer.
Over the second half of 2025, the average of the top five motor quotes fell by -4.3%, roughly half the rate of decrease observed in the first half. On a year-on-year basis, motor premiums in December 2025 sat -11.4% below where they stood in December 2024.
Compared to two years ago, motor premiums are -25.6% lower after the continued declines.
Stephen Kennedy, Director at Pearson Ham Group, commented:
“Motor insurance pricing continues to drift lower, but at a much slower rhythm. We’re now in a phase where broad price cuts are giving way to finer adjustments – insurers appear to be near a sustainable floor in pricing and are refining their positions. This more measured approach suggests the market is stabilising; from here we expect to see greater divergence in premiums by customer segment and risk profile, as insurers focus on profitable growth and long-term market share.”
Home insurance
Combined home buildings and contents premiums likewise remained under downward pressure in Q4, but the nearly flat results for the quarter signal a significant shift from the sharper drops earlier in 2025.
The average home insurance premium slipped -0.8% over Q4, a notably smaller decline compared to the -3.8% fall in Q2 and -4.9% in Q3. In October premiums fell by about half a percent, and by November the monthly movement had nearly levelled off at around -0.1%.
This marked the fifth consecutive quarter of home insurance deflation, bringing premiums down to -12.3% lower than a year ago and average home premiums are -2% below where they stood two years prior.
Frances Luery, Product Manager at Pearson Ham Group, said:
“We’re seeing clear signs that the home insurance market is hitting its floor after a prolonged period of intense competition. Premiums are now materially lower than they were a year ago, and the minimal change in November signals that insurers have largely recalibrated their pricing following the surge of claims inflation we saw in previous years.
“The key question now is how long this stability can hold. With winter upon us, any uptick in claims could start to put upward pressure on rates. For the moment, however, consumers are benefiting from the most competitive home insurance prices we’ve seen in recent times.”
Outlook for 2026
The gradual slowdown in premium reductions through late 2025 has been accompanied by a more nuanced, segmented market.
Pearson Ham’s analysis indicates that, rather than moving in lockstep, insurers have been pursuing different pricing strategies depending on their circumstances. The market split into two broad camps over the course of 2025 – one group of providers effectively reached their price floor by the end of last year, levelling out in Q1 2025 and then beginning to creep up in Q2, while a second group continued to push prices down through the first quarter before finally levelling off in Q2.
This dual-track behaviour earlier in the year laid the groundwork for the divergent pricing paths now evident. By the second half of 2025, some insurers had already started nudging certain premiums upward in select segments, even as others maintained their downward pricing path.
Stephen Kennedy, Director at Pearson Ham Group, commented:
“Targeted adjustments are likely to become more pronounced as the era of across-the-board premium cuts draws to a close and insurers shift focus to profitable growth and market share retention within their chosen niches. The coming months are expected to bring a more sustainable balance between competition and profitability, with any future price firming likely to be measured and segmented.
“Put simply, Q4’s modest declines and the stabilising trends across the board hint at a market settling into a new normal. The industry enters 2026 in a markedly different position than a year ago, arguably leaner and wiser, as the focus shifts from blunt price competition to strategic segmentation and sustainable underwriting.”
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