Insurers have taken action too early on the expected benefits of regulatory reform

The latest drop in personal motor rates is bad news for motor insurers, according to Shore Capital analyst Eamonn Flanagan.

“The latest price index from Confused/Towers Watson for personal motor insurance makes for grim reading for the likes of Admiral, Direct Line and Esure,” Flanagan said. “According to the index, the cost of motor insurance has fallen again in Q1 2014, after a suggestion that rates might have stabilised in Q4 2013.”

And Flanagan said that this drop in prices was down to several factors, including insurers taking action too early on the expected benefits of regulatory reforms .

“It may be that companies are reflecting the potential benefits from recent regulatory changes, even though these benefits have yet to become fully evident in our view,” he said.

“Nevertheless, competition remains fierce in the industry,” Flanagan added.

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