The company’s chief financial officer further identified price comparison websites (PCWs) as an ‘important distribution channel for us’, while new group chief executive Milena Mondini de Focatiis celebrated the insurer’s premium refund initiative, describing it as ‘a bit unique in the market’
Admiral Group said it expects “to be less impacted than maybe some others in the market” once the FCA’s fair pricing reform measures have been implemented.
Speaking to journalists following the publication of the insurer’s 2020 full year results this morning, chief financial officer Geraint Jones said: “What we find at Admiral is that the large majority of our customers come via price comparison sites and they shop actively in the market each year.
“We expect to be less impacted than maybe some others in the market, but slightly difficult to comment at this point when we haven’t got the full rules in sight yet or the implementation date.”
Despite expecting the FCA to announce its formal rules around remedying dual pricing “imminently”, Jones added that “we’re a little bit unsure as to what the final sets of rules will be, or when those rules will be implemented”.
However, he does expect “that prices for new policies will increase and pricing for existing customers, particularly those customers that have been with their insurers for a long time, might come down”.
Dual pricing or price walking refers to when new customers are offered more competitive premium prices than long-standing customers. Last September, the FCA published its General Insurance pricing practices market study report, which proposed measures to tackle this practice.
Important distribution channel
A further area of the market predicted to be impacted by the FCA’s final rules on price walking is price comparison websites (PCWs), however Jones noted that “in a group profit of £638m, [Admiral Group’s] comparison businesses made just over £30m”, indicating a “good, strong performance from those businesses in 2020”.
Jones added that Confused.com reported a particularly good set of financial results for 2020, including an “increase in revenues and a 40% increase in its profit for the second year on the trot, which is a great result”.
He hopes that this upwards trajectory continues for the group’s PCW businesses “because they’re a really important distribution channel for us”.
Other PCWs Admiral Group currently owns include Compare.com, LeLynx.fr, Rastreator and Rastreator.mx.
Despite Confused.com’s contribution to the business’s profits, Jones confirmed that the sale of Admiral Group’s Penguin Portals and Preminen businesses, which includes Confused.com, is expected to complete around April or May.
“It has to go through a series of regulatory and competition authority approvals. They’re progressing in line with plan,” Jones added.
Future of motor claims?
In terms of motor claims trends, Admiral’s group chief executive Milena Mondini de Focatiis, who replaced Admiral Group co-founder and former chief executive David Stevens after he retired on 31 December, said that the insurer expects “a return to more normal levels” and a “minor pick up” in claims frequency once lockdown restrictions are more fully lifted come June.
She predicts that in the long run, “we may [see a return to] previous trends before pandemic”, including “very mild inflation for [personal injury], but there’s also the whiplash reforms to take into account that can reduce severity for smaller motor injuries”.
In addition, she believes that some elements from the pandemic may influence motor claims trends moving forward, such as the increased appetite for home working and reduced commuting, however “that’s something we need to see what the new normal will look like”.
Jones added: “The impact might not be uniformly distributed. If people work from home, then that means less miles driven. If people avoid public transport for a period of time, then that might mean more miles driven. We’ll have to wait and see what happens and adapt to it.”
Speaking on the £110m automatic refund Admiral Group awarded to all its car and van insurance customers who were driving less during the pandemic, Mondini de Focatiis said she was “very happy to have done something helpful for the customers in a moment that was difficult for everybody”.
She continued: “We received really overwhelming, positive feedback from our customers. Our net promoter score improved very substantially this year – a lot of contact and complements from our customers for this initiative that has been a bit unique in the market.
“No other competitors have really replicated something similar or of this magnitude.”
This was Mondini de Focatiis’ first financial results update since taking the helm at Admiral Group.
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