Direct Line increased its car insurance prices in the first months of 2017 following the government’s decision to slash the personal injury discount rate, the motor insurer has revealed.
Reporting its first quarter results, Direct Line said the Ogden rate cut did not have a significant impact on premiums, which increased by 6.6% on average.
“In motor, the Group traded well in the quarter both before and after the Lord Chancellor's decision to reduce the Ogden discount rate,” the company said. “While the Ogden decision had little impact on the first quarter trading result, the Group has increased prices in response to the lower discount rate and the anticipated impact on claims inflation.”
Despite the price hike, Direct Line won more commercial business in the first quarter, with gross written premium rising by 4.2% from £777.8 million to £810.3 million. The company’s motor own brands in-force policies grew by 5.9% year on year, while home own brands in-force policies grew by 2%.
According to the insurer, lower new home business volumes were recorded in the first quarter as a result of previous price hikes in response to rising home claims inflation.
“Overall, I am pleased with the positive start we have made to the year, continuing the momentum we built in 2016 and supported by continued strong growth in the Direct Line brand,” said
Direct Line Group CEO Paul Geddes.
“We have delivered particularly strong results in motor and this performance has more than offset the challenging home market,” he added.
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