(Reuters) - Britain’s largest motor insurer Direct Line Insurance Group Plc on Wednesday reported a drop in gross written premiums for the first quarter as it continues to battle tough competition in the market.
After a year marred by volatile weather in the UK, motor insurers have struggled with strained prices in a highly competitive market.
“The motor market remained highly competitive, with market premiums failing to keep pace with claims inflation,” Chief Financial Officer and CEO-designate Penny James said.
The cost of a comprehensive motor insurance policy fell 1 percent in Britain in the first quarter, pushed down by uncertainty around the rate used to calculate compensation for personal injuries and the Civil Liability Bill, a survey showed last month.
FTSE 100-listed Direct Line said gross written premiums for motor insurance fell to 386.9 million pounds in the three months ended March 31, from 404 million pounds a year earlier.
That in part contributed to a 2.1 percent fall in total premiums to 753.9 million pounds, which fell short of the 782 million pounds estimated by KBW analysts.
Smaller peer Hastings Group Holdings Plc last month said its full-year loss ratio, the amount it spends on claims compared to how much it earns on premiums, would inch towards the higher end of its target range.
Direct Line said motor in-force policies were flat quarter-on-quarter as its pricing initiatives offset some of the pressure from falling prices.
The company said claims inflation was at the upper end of its long-term target of 3 percent to 5 percent due to higher motor third-party property damage costs.
Reporting by Muvija M and Noor Zainab Hussain in Bengaluru; Editing by Shounak Dasgupta