Insurers hit by drop in car premiums income

0
Have your say

TWO of the UK’s biggest car insurers are being squeezed by falls in premium income, figures have revealed.

In its first results as a listed company, Churchill and Green Flag owner Direct Line Group saw its gross written premiums dip 5 per cent to £1bn in the three months to September 30 after the number of in-force motor policies fell to 4,094 from 4,135.

Meanwhile, rival Admiral said its group turnover, or written premiums, fell by 2 per cent to £570m in the quarter to September 30, as premium rates fell and UK car insurance turnover dropped 5 per cent to £502m.

The figures add to evidence from the AA last week that car insurance premiums are coming down, with Admiral blaming the downturn on cyclical trends as it slows its rate of growth due to rates coming down.

However, after a miserable summer of storms and floods, Direct Line Group saw £100m worth of home claims related to adverse weather in the first nine months of the year, which is more than twice the £50m expected.

Direct Line, which was spun off by Royal Bank of Scotland last month, reported a slight dip in operating profits for the quarter to £123.7m, from £128.3m a year earlier.

However, it said it was halfway towards achieving its £100m cost-cutting target, due in part to a previously-announced 900 job losses.

The insurer has about a quarter of its workforce in Yorkshire, around 3,750 staff, at sites in Leeds, Pudsey and Doncas- ter.

The number of in-force policies were up to 20,066 from 20,033, as the number of rescue and commercial products helped offset the drop in motor policies and a flat home performance.

Within motor, Direct Line said it did see lower-than-expected claim costs for small claims on bodily injuries.

Admiral said the number of vehicles on its books rose 8 per cent to 3.55 million in the year to date and that UK claims “continue to be encouraging”.

Commenting on the lower premiums, chief executive Henry Engelhardt said: “The UK car insurance market is cyclical and we are in the softer part of the cycle with premium rates coming down.”