Otorists experiencing the most savage cost of living crisis in recent memory are set to be hit hard as the three main UK insurers Direct Line have said they will raise premiums by a potential 10% .
CEO Penny James said insurance premiums “must reflect” supply chain issues in the wake of the coronavirus pandemic and the conflict in Ukraine that have made it harder to find parts and delayed repairs.
Reporting first-half results to July 18, the company said its “short-term profitability” had been tested by a number of factors, including increased claims inflation and macroeconomic uncertainty, but that it would still pay a dividend to shareholders “in line with 2021”. ”.
Operating profit fell 47% to £195.5m from the first half of the year. Pre-tax profit fell 31.8% to £178.1m.
The insurer also said it had been damaged by regulatory changes made this year by the FCA which prevented it from charging what has been called a “loyalty penalty” to long-term customers.
Penny James, CEO of Direct Line, said: “The unique complexity of automotive market conditions in the first half of the year, due to significant regulatory changes, rising claims inflation and macroeconomic uncertainty , tested our short-term profitability.
“Thanks to price action, actions taken in our garage repair network and the deployment of improved pricing capability, we are now back to writing to our target margins based on the latest assumptions of sinister.”
She added: “We remain ahead of our objective of long-term return on tangible equity despite the challenges. We are announcing an interim dividend in line with 2021 and are confident in the sustainability of our regular dividends as we look to the full year. and beyond.”