Motor insurer warns claims inflation could be higher end of expectations
Hastings’ share price plummeted 11% today amid warnings that claims inflation is taking its toll.
Hastings expects claims inflation would mean that the ’loss ratio would be expected to move towards the higher end of the 75% to 79% target range’.
This spooked investors, triggering a big share price fall from 211p to 193p.
Rising repair costs and further increases in third party property damage costs are the main drivers of claims inflation, the insurance group said.
Chief executive Toby van der Meer said: ”The motor market continued to be competitive in the first quarter of 2019, but as always, we will trade through this environment with discipline whilst remaining focused on the execution of our strategy.”
Hastings is the latest insurer to suffer from rising claims inflation in motor.
Hastings reported in its first quarter results that gross written premiums were up 4% to £235.5m for the 3 months ended 31 March 2019.
|31 March 2019||31 March 2018||Growth|
|Live customer policies||2.75m||2.67m||3%|
Hastings also said that certain expenses will increase due to recent changes in UK law restricting VAT recoveries and increases in both the Financial Services Compensation Scheme and Motor Insurers’ Bureau industry underwriting levies.
Elsewhere, the transformation in repair and mobility services was going well.
Vizion Network, Enterprise Rent-A-Car and Autoglass BodyRepairs had been appointed as new claims service partners.
Van der Meer said: “I am really pleased with the progress we have made towards the strategy and plans we set out with the full year 2018 results. We have clear areas of momentum that leave us very well positioned for ongoing profitable growth in 2020 and beyond.
“Alongside many other initiatives underway, our new claims supplier deals, increased customer retention and digital enhancements demonstrate the significant progress made in the first quarter of 2019.”
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