Insurer pockets £56m in fees from customers who pay bills monthly

DIRECT Line Group pocketed £55.8m in interest from hardup motorists paying monthly premiums in the first half of this year.

The insurer charges more for drivers who split their payments rather than coughing up a single charge up front.

Direct Line said this so-called instalment income was 8pc higher than in the same period a year earlier.

Monthly-paying customers are treated as if they have taken out a loan and charged interest of between 10pc and 12pc, as well as being subjected to credit checks. Those affected are often the youngest on the road, as they tend to be charged the highest premiums and have the least cash.

‘Our rates are very competitive versus what other insurers charge,’ chief executive Paul Geddes said. Direct Line also revealed profits of £341.4m for the period, up 14.4pc on the first six months of 2016. Its total premium book expanded by 5pc to £1.7bn, and policy numbers climbed 0.5pc to 15.8m. And bosses hiked the interim dividend by 38.8pc to 6.8p, promising further rises of between 2pc and 3pc a year.

The average premium was up by around 7pc, partly because of rules which have increased the compensation insurers must pay to victims of serious crashes.