Direct Line profits fall as costs of car repairs increase

Direct Line’s operating profit dropped 95pc last year after inflation drove up the cost of vehicle repairs.

The motor insurer warned that 2023 would be affected by higher than previously expected claims inflation.

Operating profit from ongoing operations of £32.1m compared with £590m a year earlier. The company had flagged an expected underwriting loss for 2022 earlier this year.

Direct Line has hit a rough patch resulting in an unexpected dividend cut, a sharp fall in its shares and the threat of a possible credit rating downgrade. Its chief executive stepped down in January.

Profits were also affected by higher weather-related claims, challenging investments and regulations, it said.