Direct Line sees ‘challenging’ earnings outlook amid soaring motor claims costs

Insurer Direct Line said its earnings outlook remains “challenging” due to the soaring cost of claims, despite ramping up prices across its motor and home policies.
By Greg Wright
Published 9th May 2023, 08:58 BST

The group said it was seeing a further impact of the rising cost of motor repairs due to inflation, which is expected to put pressure on earnings this year.

In response, it said it was hiking car cover prices, which pushed up average motor renewal premiums by nearly a fifth – 19 per cent – year-on-year in the first quarter.

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This led to a 2.5 per cent fall in policies in the quarter, but premium price rises helped the motor division’s gross written premium lift 3.3 per cent to £358.7m.

Insurer Direct Line said its earnings outlook remains “challenging” due to the soaring cost of claims – despite ramping up prices across its motor and home policies.Insurer Direct Line said its earnings outlook remains “challenging” due to the soaring cost of claims – despite ramping up prices across its motor and home policies.
Insurer Direct Line said its earnings outlook remains “challenging” due to the soaring cost of claims – despite ramping up prices across its motor and home policies.

The firm also said it was seeing “significant price increases” across the home insurance market, with its gross written home premium up by 2.1 per cent.

It is guiding for claims inflation at “high single digits” across motor and home, although the car market has been hit particularly badly by surging repair costs, for both parts and labour.

Overall, it said gross written premiums rose to £805.7m from £734.3m year-on-year in the first three months of 2023.

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Jon Greenwood, acting chief executive of Direct Line Group, said: “Trading has been positive over the first quarter with premium growth across motor, home and commercial, and this trend has continued into April.”

He added: “Whilst 2023 earnings outlook continues to be challenging, the group has many strengths and we continue to take the actions required to drive business performance.”