Insurers are being urged to focus on Total Instalment Costs (TIC) rather than Annual Percentage Rate (APR) as more home and motor policyholders opt to pay monthly, according to a report by Consumer Intelligence.
The report, Instalments in 2025 – The Real Cost of Paying Monthly, highlights that TIC is the cost most visible to consumers on price comparison websites. It affects how quotes are ranked and how fairness is assessed under the Financial Conduct Authority’s Consumer Duty requirements.
TIC represents the actual extra amount a customer pays for choosing monthly payments instead of paying in full upfront. It includes the deposit, monthly instalments, and the total price difference compared to an annual premium. In contrast, APR is a standardised percentage rate used to express the cost of borrowing over a year, commonly seen in credit products.
While APR provides a useful comparison across financial products, Consumer Intelligence said it can be less meaningful to insurance customers, who are more likely to look at the total they will pay over the course of the policy.
According to the report, more than 40% of insurance customers now pay monthly, a trend that continues to grow. Because of this, the report said TIC has become a more relevant benchmark for pricing, competitiveness, and compliance.
In connection with the findings of the report, Consumer Intelligence developed the TIC Quartile Model. The model divides providers into four groups based on their TIC levels. Those in the first quartile (Q1) charge the lowest TIC, while those in the fourth quartile (Q4) charge the highest.
The analysis considers deposit requirements, the number of monthly payments, and the cost difference between monthly and annual payment methods. According to the data, major retail banks generally fall into Q1 for home insurance, often offering 0% instalment costs. Intermediary-led brands are more commonly placed in Q3 or Q4.
In motor insurance, TIC ranges in Q1 from 0% to 8.1%; in Q2 from 8.2% to 10.4%; in Q3 from 10.5% to 12%, and in Q4 from 12.2% to 20%. For home insurance, Q1 runs from 0% to 4.2%; Q2 from 5.7% to 8.6%; Q3 from 8.8% to 11.2%, and Q4 from 11.4% to 23.1%.
Younger drivers, especially those under 35, tend to face higher TICs due to higher premiums and typically lower credit scores. Meanwhile, older homeowners are more likely to encounter lower TICs and may be more responsive to pricing clarity.
The findings are based on live quotes from price comparison websites, customer behaviour data, and Consumer Intelligence’s work with insurers on pricing and compliance.
“Premium finance is a central test of how insurers think about competitiveness, and risk. When 40% of your customers pay monthly, if you don’t measure TIC, you’re not managing your risk, visibility or growth,” said Ian Hughes (pictured above), CEO of Consumer Intelligence. “This is not about who is good or bad. It is about knowing your position, understanding your strategy, and making informed decisions.”
