The owner of insurers Churchill and Direct Line said car premium income fell 10 per cent in the first quarter as it battled “extremely competitive” conditions.
Direct Line Group reported a 4 per cent fall in its average car insurance prices while the number of in-force car policies declined 1.2 per cent to 3.7m as it moved to protect margins by refusing to chase market rates lower.
Car insurance premiums have fallen sharply recently, with the average price dipping more than £100 over the last year, according to motoring body the AA, as the industry cracks down on bogus claims such as whiplash injury.
Direct Line added that claims from storms and flooding came in at £60m in the first quarter, lower than its previous guidance of £70m to £90m.
The company, which is one of the country’s largest car insurers and a major employer in Yorkshire, said overall gross premiums fell 5.6 per cent to £949.3m in the three months to March 31, in part reflecting competition in the motor and home insurance markets.
The total number of policies written fell from 19.4m to 18.1m over the same period a year earlier, although the company has benefited from improved claims trends in motor insurance.
The company said: “The UK motor and home markets are highly competitive. The group will continue to prioritise targeting appropriate margins, even if this is at the expense of policy volumes.”
The Competition Commission is looking into the car insurance market.