Thompsons Solicitors is calling for government action to protect motorists from increased premiums as car insurers announce another rise in profits and dividends.
Law firm Thompsons is demanding action from MPs across all parties, after car insurance giants Admiral and Direct Line both reported an increase in half-year profits and payment of record interim dividends to shareholders.
Admiral insures more than three million UK motorists, and has admitted that actual claims costs have been much lower than its projections over a period of four years. The company will pay an interim dividend of 51p per share in October at a cost of £140m. Admiral’s profits from car insurance in the UK have risen 6% to £219.2 million in the first six months of the year, owing to an increase in premiums charged to motorists and the release of extra cash from reserves due to lower than expected claims costs. The company said actual accident pay-outs over the period since 2011 had been ‘significantly’ better than its projections and promised there was likely to be more to come if claims develop as expected because its reserves include even more of a buffer than they did this time last year.
News of Admiral’s lucrative returns comes only two weeks after Direct Line, the UK’s largest car insurer, reported a 10% rise in half-year profits and awarded shareholders a £69.5m interim dividend.
Meanwhile, the Association of British Insurers (ABI) have indicated that they will continue to campaign for restricted access to justice for motorists. At the end of July, they advocated that the government should continue to attack ‘compensation culture’ and ‘frivolous’ personal injury claims.
Direct Line and Admiral have a combined market share of more than 25%, giving them – without consumer protection – a major influence over the price motorists have to pay for the compulsory requirement to have car insurance.
Tom Jones, head of policy at Thompsons Solicitors said:
“No amount of profit seems enough to satisfy the car insurers.
“They are already reaping a rich harvest from the new fixed cost Portal regime introduced by a government that is bending over backwards to be friendly to them, and yet they want more.
“It really is extraordinary that they are being allowed to get away with selling the myth that they are victims of large scale fraud, while at the same time telling their shareholders how great the claims environment is and paying out ever-bigger dividends.
“The costs in the Portal are unrealistic, punitive and set by the insurers to suit themselves.
“The benefits of it for the insurers are obvious to anyone who reads their financial statements, and yet they blithely raise motor premiums relying on a smokescreen they have themselves created.
“It’s time for MPs of all parties to come together to protect motorists and accident victims not the insurers who clearly profit from it handsomely. Car insurance is a captive market, and there should be a fair and transparent system for regulating it.”