Admiral's fortunes took a turn for the worse during the first quarter of the year as the cost of insuring cars finally began to fall.
The insurer blamed lower motor insurance premiums as its turnover dipped 9% to £470 million. Separate figures from the AA also confirmed that consumers were enjoying some respite after years of personal injury claims inflating costs across the industry.
Henry Engelhardt, Admiral’s boss, played down the setback.
“Little has changed since the full-year results and our expectations for 2013 remain positive and unchanged,” he said.
“Year-on-year UK car insurance market premiums are down around 10%. Not surprisingly our turnover has also fallen, but, as we have said before, we continue to be focussed on margin not volume and we believe this is not the right time for us to grow our market share in the UK. We are pleased to report that our claims trends continue to be positive.”
The shares fell by about 1%. The FTSE 100 insurer said its overseas business was starting to bear fruit after years of underperformance with international revenues up 20% at £48 million.
“We are enjoying good growth outside the UK and are happy with the progress we are making in all our international markets,” Engelhardt added. “Our financial position remains strong and we continue to focus on delivering returns for our shareholders through our capital-efficient and cash-generative business model.”
According to the AA, the average motor premium in the UK costs £746.75. Simon Douglas, director of AA Insurance, said: “It’s shameful that 70% of those in car crashes on Britain’s roads are said to make a claim for injury even if no injury has been suffered, amounting to some 570,000 claims per year, costing £2 billion. In France for instance, only 3% of crashes result in a personal injury claim.
“Britain really is the whiplash capital of Europe.”
The AA also revealed that home insurance premiums were falling despite an estimated cost to insurers of £1.2 billion for last year’s floods. It said the cost of insuring contents was down about 2.4% year-on-year, although customers in some parts of the country continued to suffer.
“Flood-affected homes will have seen big premium increases especially if they have suffered two or three flood claims,” Douglas added.