Pearson Ham, an insurance pricing consulting firm, reports that the average cost of financing auto insurance premiums has decreased over the past year.
This follows increased regulatory oversight by the Financial Conduct Authority (FCA), which launched an assessment of the country’s premium finance market due to concerns about premium finance.
The FCA’s investigation comes amid concerns that individuals who fund car insurance payments are not benefiting from a level or competitive playing field, particularly as prices across the industry soar.
According to Pearson Ham, the average cost of monthly auto insurance premium payments has fallen from 11.9% in October last year to 10.7% in September 2024.
However, premium finance fees still vary widely, with interest rates ranging from 1.9% all the way up to 20.2%.
In addition to interest, auto insurance companies also require a deposit or down payment. As of September 2024, all auto insurance companies require such deposit payments, with the average down payment decreasing to 12.7% from 13.6% in October 2023.
The maximum required auto insurance deposit was 33% and the minimum was 8.3%.
Pearson Hamm data shows an overall downward trend in car insurance installment costs through 2024.
Added to this was a decline in car insurance premiums themselves, and the asking price in September 2024 was down 8.5% compared to the same month last year.
Stephen Kennedy, director at Pearson Ham Group, said: ‘The FCA is increasingly scrutinizing how the premium finance market works and the extent to which this leads to poor outcomes for customers. “Pearson Hamm’s analysis provides valuable insight into how the market has eased pricing over the past year.” .
“This research shows that although costs for consumers are beginning to ease, the level of volatility remains seen as a challenge, potentially leaving some consumers exposed to disproportionately high charges. ” Pearson Ham welcomed the FCA’s commitment to transparency and urged insurers to continually improve their offerings to ensure consistency and fair value for consumers. I am strongly requesting it. ”
“Pearson Ham Reports Decrease in Auto Insurance Premium Finance Costs” was originally created and published by Motor Finance Online, a brand owned by GlobalData.
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