"We fully expected premiums to rise as a result of the new pricing regulations, it was simply a question of how much."
The data provides an aggregated view of average insurance premium movements across the big four price comparison websites and key direct insurers.
It reveals that the average premium for home insurance jumped by 9.1% in January to an average of £154, while motor rose by a lesser 4.9%.
Of all the age demographics, the over 50s have seen the biggest increases. Homeowners in this age group were subject to a premium increase of 5.8% in the 12 months to January 2022 - with a hike of 10.9% in January alone – and now pay £161 on average.
The FCA's new rules ensure that renewal quotes are not more expensive than they would be for new customers, after finding that many firms were offering below-cost prices to attract new customers who they think will not switch in the future and will therefore pay more.
The FCA admitted that the changes meant firms are "unlikely to offer unsustainably low-priced deals to some customers", but estimates that the measures will save consumers £4.2 billion over 10 years.
Consumer Intelligence market insight expert, Michael Miskelly, said: “January’s uptick in premiums is stark. Insurers now have to offer the same prices and incentives to renewing customers as they would for an equivalent new customer.
“We fully expected premiums to rise as a result of the new pricing regulations, it was simply a question of how much. We also predicted the larger increase in home insurance. Up until now, the home market has been a beneficiary of high levels of loyalty, but also prone to more extensive price walking.
“Many have asked us whether premiums will continue to rise. The answer is yes, but not as a continued reaction to the new regulations. The large increase seen in January was a one-time step change, signifying the industry’s move to become compliant with the new rules.
“Over the coming months we will most likely see premium fluctuation at brand level as providers jostle to find their place in the new competitive landscape. However, over the next year, underlying upward pressure on costs will likely see both markets harden, and consumers pay more for their motor and home insurance. Factors contributing to this include the rising cost of motor repairs and parts, building materials and labour, among other things."