’Our insurance business has increased prices in line with this, growing profit at the same time,’ says group

The AA managed to increase its insurance revenue during the first half of 2023 after raising prices in line with inflation.

In a trading update published today (9 October 2023), the group reported that it secured an insurance revenue of £64m in the six months to 31 July 2023, up from £54m during the same period last year.

Its adjusted earnings before interest, taxes, depreciation and amortisation (ebitda) also grew, rising from £12m to £18m year-on-year.

The AA said the growth came after the insurance market saw “strong price inflation”.

Earlier this year, a spokesperson from LV= General Insurance told Insurance Times that “prices are going up everywhere at the moment and, unfortunately, insurance is no different”.

According to the ONS’ latest consumer price indext (CPI), published on 20 September 2023, the measure of inflation currently stands at 6.7%.

“The insurance market has seen strong price inflation and our insurance business has increased prices in line with this, growing profit at the same time,” the AA said.

Policy book

Despite the increased prices, the group also revealed that it grew its motor insurance policy book by 4% to just over 1m in the half year.

It came after Consumer Intelligence earlier this year (31 August 2023) said that the AA saw a 1.2% increase in its share of the UK general insurance market in the six months to April 2023.

According to Consumer Intelligence, this made it the insurer with the most momentum during the period.

Speaking about its outlook for the second half of the year, the AA said: “We remain focused on driving our transformation and developing further propositions for customers, with ensuring the health of our business by delivering further efficiency savings and assessing our pricing strategy to manage cost inflation in a sustainable manner.”