Overview

• The regulator found pay-monthly margins ranged from 14% to 62% between 2018 and 2023 with insurers averaging a 53% margin over costs.
• Nearly half of motor and home insurance policies used premium finance in 2023, with 60% of motor and 41% of home policyholders citing affordability needs.
• Typical APRs on instalments sit between 20% and 30%, and almost one in five consumers face rates above 30%, adding about 8% to 11% in extra costs.
• Some firms may be inflating underlying insurance premiums for pay-monthly customers—a practice dubbed “double dipping”—without objective justification.
• The FCA is gathering industry and consumer views until September 30, 2025, before launching firm-by-firm scrutiny of high-priced premium finance products.