Pricing consultancy Pearson Ham has reported that premium finance costs have eased in both the motor and home insurance sectors. In the motor market, it said premium finance costs averaged just over 10%, which was approximately one percentage point lower than the same time a year ago. In the home insurance market, the average premium finance charge was 8.1%, which was 1.3 percentage points lower than the same time last year.

Frances Luery, product manager at Pearson Ham Group, said: “Our latest data shows a clear drop in what insurers are charging for monthly payments, which is good news for consumers. However, we’re also seeing insurers become more picky about who gets to pay monthly.

“In effect, they’re offering better deals but to a narrower group - favouring customers with stronger credit. It’s a balancing act between competitiveness and risk management, and it will be interesting to see how this plays out in the coming months.”