Britain’s largest motor insurer Direct Line reported a bigger than expected rise in motor insurance prices, helping to boost its sales.
The insurer, whose brands include Churchill, Green Flag and Privilege, said gross written premiums rose 3.1 per cent in the third quarter following an 6.8 per cent rise in motor premiums.
Direct Line, which employs around 2,000 staff in Leeds and Doncaster, said it’s on track to achieve its 2015 targets and has cut costs by seven per cent in the first nine months of the year.
Strong competition in British motor insurance has put pressure on prices in the past few years, partly because of the growth of price-comparison websites. But in the past few quarters prices have been increasing.
A benchmark survey by roadside assistance firm AA showed a 4.8 per cent increase in the third quarter in the Shoparound quote - an average of the five cheapest quotes returned from price comparison sites as well as direct insurers and brokers.
Data from price comparison website Confused.com and consultants Towers Watson & Co showed an 8.1 per cent rise in motor premium prices for the period.
Direct Line said gross written premiums rose 3.1 percent to £844.5m in the third quarter, with a 6.8 per cent rise in gross written motor premiums.
“This is a good headline increase, and management indicate this is where they need to be to pricing to meet their target loss ratio,” Morgan Stanley said in a note to clients.
Direct Line, which competes with Admiral Group, RSA Insurance and Aviva, also said it had benefited from the absence of claims due to major weather events and was on track to achieve its 2015 targets.