Insurance premiums for both motor and home policies continued to decline in the third quarter of 2025, according to new figures from Pearson Ham Group’s General Insurance Price Index.
The data indicates that, while competition remains strong, the pace of price reductions is slowing, suggesting a more stabilised and segmented market environment.
The average of the top five quoted motor insurance premiums dropped by 2.9% in Q3 2025, following a 4% decrease in the previous quarter. This marks an extension of the downward trend that began in April 2024, though the rate of decline has moderated. Monthly reductions were consistent, with premiums falling by 1% in July, 0.9% in August, and 1.1% in September.
Previous data showed that the pace of decline in motor premiums is indeed slowing, with July recording a 0.9% drop and year-on-year reductions at 16.3%.
Meanwhile, over the last six months, top-five motor premiums have decreased by 6.8%. Year-on-year, premiums are now approximately 15% lower than in September 2024. Despite this, prices remain 9% above the level seen at the start of 2020, highlighting the lingering effects of pandemic-era and post-GIPP inflation.
Stephen Kennedy (pictured above, left), director at Pearson Ham Group, said, “Motor insurance pricing continues to edge down, but the rhythm of reductions has steadied. We’re now in a more controlled phase of competition - one where insurers are refining their positioning rather than driving headline price cuts.”
Kennedy said that the market is approaching a natural floor, with future pricing likely to diverge by customer type, risk profile, and distribution channel as insurers focus on sustainable market share.
Home insurance premiums also moved lower in the third quarter. Combined buildings and contents premiums fell by 4.9% over the quarter, a slightly larger drop than the 3.8% recorded in Q2. Monthly changes were steady, with decreases of 2% in July, 2% in August, and 1.1% in September, marking the fifth consecutive quarter of decline.
In July, home insurance premiums saw their sharpest monthly fall in a year, with average top-five combined buildings and contents premiums dropping 2% compared to June. Prices were 9.7% lower than in July 2024 and 8.1% below January 2025 levels.
In the past six months, home insurance premiums have fallen by 8.6% and are now 13% lower than in September 2024. However, prices remain 6.4% higher than two years ago, reflecting the ongoing impact of inflation that influenced pricing through 2023 and early 2024.
Frances Luery (pictured above, right), product manager at Pearson Ham Group, commented, “We’re seeing a pattern of sustained competition across the home insurance market, with premiums now materially lower than last year. However, the data still reflects a market that’s recalibrating after a prolonged period of claims and cost inflation.”
Luery noted that the key question is how much further prices can realistically fall before renewed upward pressure from claims trends and weather-related losses as winter approaches.
Pearson Ham’s analysis indicates that both home and motor insurance pricing are showing signs of stabilisation. The firm said that it expects pricing strategies to become more differentiated in the coming months, with greater variability across customer segments and regions as insurers balance competitive dynamics with profitability.
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