Motor insurance group Admiral yesterday said rates rose by an average 12 per cent last year in the largest annual increase for nearly a decade.
The group, which owns brands including Diamond, elephant. co.uk and price comparison site Confused.com, said premiums were rising across the market following a period of minimal increases and to "compensate for claims inflation in recent years".
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ut there was better news for the group's 3,500 staff, who were told yesterday they will share out £9m in bonus shares after Admiral notched up a 7 per cent hike in annual profits.
Admiral will distribute the windfall between its staff – worth an average of more than £2,500 each – following a £215.8m profits haul in 2009. Investors will also get a 10 per cent increase in the annual dividend payout after the record result.
Admiral said the cost of car insurance was likely to rise again by a similar amount over 2010 amid the rise in personal injury claims, made easier in recent years by the explosion of 'no win, no fee' compensation lawyers.
Insurers were also battered by poor returns on premium money invested, which they use to offset losses on insurance business, according to Admiral.
It said that while its insurance business remained profitable, the group was forced to raise rates in line with the market to avoid being swamped by new business. Admiral added its average written premium stayed largely the same, at £430.
