Rising third party credit hire cost, repair costs and mid-range bodily injury costs accounted for the claims inflation
Hastings continued to be hit with claims issues, with the share price falling 4% after its third-quarter update.
Investors were spooked after it reported a pre-Ogden loss ratio of 79.1% for the first nine months of the year, trending higher than the predicted loss ratio of 75-79%.
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The insurance firm has reported a string of disappointing results over the last eighteen months as it struggles with claims inflation, battering the share price.
Two years ago the shares were trading above 300p and now they stand at just 183p, not far off the intial flotation.
Claims inlfation issues
Net revenue is down by 2% to £563.8m, while claims inflation is now running at 7-8%, it reported.
Inflation was seen in third party credit hire cost, repair costs and mid-range bodily injury costs.
”The Group continues to monitor claims trends and apply price increases to remain within the full year 75%-79% target range.
”The full year loss ratio outlook will however be dependent upon claims experience during the fourth quarter and the loss ratio, before the impact of the Ogden rate change, could move from the top of the target range to slightly above should elevated claims inflation continue,” the company warned.
Hastings added: ”The market has remained competitive, with market premiums continuing to lag claims inflation, and the Group’s new business competitiveness has therefore fallen.”
It also said it supported the interim FCA pricing report which seeks to end several practises, including so-called ‘price walking’ where customers automatically pay higher premiums upon renewal.
GWP was up 2% to £753.1m.
”The increase in premium prices have been offset by a change in the risk mix of business that is aimed at lower risk segments and a reduction in younger drivers,” it said.
Commenting on the trading update, chief executive Toby van der Meer said ”the market remained competitive in the third quarter, with market premium inflation continuing to lag claims inflation.
”We maintained focus on pricing discipline, applying rates ahead of the market, in line with our stated targets and strategy. We are confident that continuing to invest in our growth opportunities whilst navigating these current market conditions is the right thing to do.”
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