Company claims number two spot in telematics market
The trend of falling motor rates in the UK is over, according to Admiral chief operating officer and co-founder David Stevens, as companies start to feel the pinch in their current year underwriting profitability.
But it is less clear how quickly rates will rise and profits will improve.
Speaking to journalists after the release of Admiral’s first-half 2014 results this morning, Stevens said: “We have seen the end of the falls in car insurance premium and there are a number of insurers who announced some price increases, including ourselves.”
He added: “The balance of probability is that premiums will be higher in December than June but it is hard to know whether that will be a modest increase or a more material one.”
Admiral has already started to feel the pain from falling rates. Without reserve releases, Admiral’s current-year UK motor loss ratio worsened by three percentage points to 85.3%.
However the company released £73.1m of reserves to improve its UK motor combined operating ratio (COR) by two percentage points to 80.2% in the first half of 2014.
Stevens said: “Where it goes from here depends on how premiums move and how claims develop over the next 18 months to two years.
“If, as we consider likely, claims revert to rising three to four percentage points above underlying inflation, that will create pressure. But that pressure may be offset at some point by a return to premium inflation in the UK market.
Second in telematics
Admiral also claimed that it is the second biggest telematics player in the UK, based on its share of total new business sales.
Stevens said that the number of vehicles covered by Admiral’s telematics offerings was “towards the top end” of the 40,000 to 60,000 range.
In total Admiral insures 3.15 million vehicles in the UK.
Stevens declined to comment on rumours that Admiral is looking to advance its telematics position by buying telematics company Insurethebox.