Rising premiums help insurer to lift profits

Insurer Admiral has booked a rise in first-half profits, helped by price increases for drivers as it looked to mitigate the impact of a change in the way personal injury claims are calculated.

The group saw pre-tax profits rise 2% to £193 million in the six months to June 30, while turnover rose 15% to £1.45 billion.

Earlier this year, Admiral took “pre-emptive” action to increase prices as it looks to recoup a £150m hit following a government decision to cut the so-called Ogden discount rate calculation.

“The UK car insurance business benefited from continued success in attracting and retaining customers in the competitive UK market and this, together with higher average premiums, contributed to an increase in turnover,” the firm told investors in an update yesterday.

“Admiral increased its rates in December last year in advance of the Ogden change and has continued to do so throughout the first half.”

As a result, UK insurance turnover rose 9% to more than £1bn.

Shares in the insurance sector plunged earlier in the year after then Lord Chancellor Liz Truss put forward changes to the discount rate calculation, which is expected to increase payments given to victims of life-changing injuries through medical negligence, car crashes and other incidents.

The UK Government is now consulting on the move.

Admiral, which also owns price comparison website Confused.com, saw its annual profits tumble by a quarter in March after accounting for the change.

Group chief executive David Stevens said: “Most of the adverse impact from the increase in the costs of large injury claims, resulting from the change in the Ogden discount rate, was captured in our 2016 second-half result.

“However, some extra costs carry into 2017.”

Admiral Group chief executive David Stevens.