(Reuters) - Insurer Hastings Group (HSTG.L), which sells most of its policies via price comparison websites, sees opportunities to gain market share this year as legal changes drive up the cost of motor insurance premiums in Britain.
A surprise cut this year in the discount rate used to calculate lump sum payments in personal injury claims has pushed up the size of those payments and dented several insurers’ profits.
Insurance premiums across the industry have climbed about 3-4 percent over the last couple of months, Chief Executive Gary Hoffman said, adding that Hastings would benefit by providing more competitive deals for the increased number of customers switching policies.
“Anything that increases premiums means more customers shop around, and our business model concentrates on price comparison websites (which) means that we are able to deploy our retail skills to win more business relative to others,” he told Reuters.
On the back of higher premiums, Hastings on Friday reported a 24 percent increase in first-quarter net revenue to 164.5 million pounds, ahead of RBC Capital Markets’ forecast of 158 million pounds.
The British insurance broker’s shares rose to a record high as it also reported a 26 percent rise in gross written premiums to 214.7 million pounds, and an increase in market share in UK private car insurance to 6.7 percent from 6 percent.
“Higher prices will likely lead to increased churn and greater use of price comparison websites among consumers, and therefore allow Hastings to increase its share of the UK motor market faster than previously forecast,” Berenberg analysts wrote in a note.
Hastings' shares were up 3.8 percent at 308.5 pence at 0901 GMT, having pared some of their earlier gains. The stock was the second biggest percentage gainer on London's midcap index .FTMC.
Reporting by Esha Vaish and Noor Zainab Hussian in Bengaluru and Carolyn Cohn in London, Editing by Amrutha Gayathri and David Evans