Admiral is anticipating further cost pressures as a result of the change to the discount rate, but has confirmed that whiplash claims are falling.
David Stevens, group CEO of Admiral said: “We’ve seen a more modest increase in profits reflecting the fact that we’re still paying some price for the change in the Ogden discount rate.
“There is some good news. The number of whiplash claims is actually coming down, partly because the number of claims management companies is shrinking.
“That might have some benefits, but towards the end of the year there will be further knock on from the Ogden change unless the government changes it in the next six months.”
The insurer, which saw its pre-tax profits drop fall by 25% in 2016, will be increasing motor premiums by an average of 10%, or £50, in the coming months due to the impact of the lowered discount rate. This follows Admiral’s decision to raise motor premiums by 7% in December last year.
Earlier this month the Ministry of Justice declined to comment on the reasons as to why the Ogden consultation response had been delayed.
“Premiums have increased substantially in the UK car insurance market over the last 12 months. The change in the discount rate adds an immediate 5% to 6%, and we think there’s more to come,” added Stevens.
“At the end of the year the reinsurers will do adjustments to their prices which they weren’t able to do when the deals were done in January 2016. So there’s maybe another 3% to 4% to come from that.”
- Top 100 Insurtech: Quarter four update
- Charles Taylor bolsters liability team by hiring senior sextet from Vericlaim
- Gallagher Bassett acquires claims management firm
- Roundtable: Is a single customer view taking off in insurance?
- Finch and ICB owner on acquisition trail with sight set on €500m revenue by 2022
- Insurtech diary: Getting stuck into insurance
- Analysis: The mystery of the missing Insurance Fraud Taskforce report