Direct Line and Admiral find it tough
Friday 02 November 2012
Britain's two top car insurers, Direct Line and Admiral, reported weaker quarterly results yesterday, held back by flat or falling prices amid mounting competitive pressure.
In its first results statement since listing on the stock market on 11 October, Direct Line said its profit between July and September fell 4 per cent, while Admiral reported a 2 per cent drop in sales over the same period.
Both companies said the price of motor cover was under pressure as insurers compete aggressively for new business. The motor insurance industry has not made a collective underwriting profit in 16 years, weighed down by a combination of falling prices and steadily rising claims, according to the Association of British Insurers.
Direct Line's chief executive Paul Geddes said average prices were flat compared with the start of the year, having fallen back after initially climbing 2 per cent.
Admiral said motor insurance premiums were falling, and that it had responded by reining in sales growth to protect profits.
Car insurance prices went into reverse in the first half of 2012, ending a two-year increase which helped insurers absorb big rises in bodily injury claims, accountants Ernst and Young said in June.
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