The owner of insurers Churchill and Direct Line yesterday revealed that car premium income fell 10 per cent in the first quarter as it battled “extremely competitive” conditions.
Direct Line Group reported a 4 per cent fall in its average car insurance prices while the number of in-force car policies declined 1.2 per cent to 3.7 million as it moved to protect margins by refusing to chase market rates lower.
Car insurance premiums have fallen sharply recently, with the average price dipping more than £100 over the past year, according to motoring body the AA, as the industry cracks down on bogus claims such as whiplash injury.
Direct Line – spun off by Royal Bank of Scotland in 2012 – added that claims from storms and flooding came in at £60 million in the first quarter, lower that its previous guidance of £70m to £90m.
The company, which is one of the country’s largest car insurers, said overall gross premiums fell 5.6 per cent to £949.3m in the three months to 31 March, in part reflecting competition in the motor and home insurance markets.
The total number of policies written by the company fell from 19.4 million to 18.1 million over the same period a year earlier, although the firm has benefited from improved claims trends in motor insurance.
The group, which also owns the Green Flag breakdown service, said: “The UK motor and home markets are highly competitive. The group will continue to prioritise targeting appropriate margins, even if this is at the expense of policy volumes.”