November 6, 2018 / 7:34 AM / 8 months ago

Direct Line reports drop in premiums as competition bites

FILE PHOTO: A photo illustration shows insurance renewal notices from Direct Line in London October 10, 2012. REUTERS/Suzanne Plunkett (BRITAIN)

(Reuters) - Britain’s largest motor insurer Direct Line (DLGD.L) reported a 5.8 percent drop in quarterly gross written premiums on Tuesday, hit by fierce competition in a sector that is dealing with the impact of high weather-related claims this year.

Like its rivals, Direct Line has been hit in the past two quarters by steep claims stemming from volatile weather in Britain, including the hottest summer in living memory following a late winter freeze, as well as increasing competition.

Direct Line, however, called its third-quarter performance “robust”, and stuck to its 2018 and medium-term financial targets.

The FTSE 100 firm, best known for its Churchill, Green Flag and Privilege brands, said gross written premiums fell to 854.5 million pounds in the three months ended Sept. 30, from 907.2 million pounds last year.

Motor insurance prices in Britain had been pushed down ahead of expected changes in the Ogden rate, used to calculate compensation for personal injuries and the Civil Liability Bill, which includes reforms likely to reduce claims for whiplash injuries. A reduction in the volume of claims also kept a lid on prices.

This fall, however, was difficult to sustain because of ongoing pressures on repair costs, uncertainty surrounding the bill and changes to the Ogden rate.

The cost of a comprehensive motor insurance policy rose by 1 percent in Britain in the third quarter, the first rise for 12 months, as per a survey last month.

Reporting by Muvija M and Noor Zainab Hussain in Bengaluru; Editing by Saumyadeb Chakrabarty

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