But chief executive David Newman says 23% dip was built into plans
Specialist motorbike broker Carole Nash made a profit before tax of £3.9m in 2013, down 23% on the £5.1m it made in 2012.
The fall came on the back of a 5% drop in turnover to £24.8m (2012: £26.2m).
Carole Nash chief executive David Newman said that the results were hit by a drop in referral fee income following the ban on personal injury referral fees, which came into force on 1 April 2013 with the Legal Aid, Sentencing and Punishment of Offenders Act (Laspo), and continued investment in the company’s Cherished Car classic car insurance product.
But he added that the results had exceeded the budget that it had agreed with its shareholder, GUK Broking Services, which is ultimately owned by French insurer Groupama.
Newman told Insurance Times: “We recognised that in terms of profits there would be a dip but we are totally relaxed about that, as is our main shareholder. They want to do the right thing for the customer and the business.”
He added: “We are historically a very profitable company and I would expect that to continue in the future, but when we need to have short-term hits on the profit to get the right offer for our customers, we will always make the decision to do that.”
Despite the dip in revenue and profit, Newman said that Carole Nash’s core motorcycle business had grown “modestly” in the year, allowing the company to retail the number one spot in motorcycle insurance. He said: “The core business is very stable.”
Referral fee ban
Newman said that by completely refusing personal injury referral fees, the company had sought to follow both the spirit and the letter of Laspo.
He said: “I am aware that there are other, creative ways that other competitors looked at this but we decided that from 1 April last year we weren’t going to take any referral fees at all.”
Carole Nash has received an alternative business structure licence from the Solicitors Regulation Authority (SRA) and set it its own legal services division, which went live on 9 December 2013.
Newman insisted that the creation of the legal services business was not designed to make up for the shortfall caused by no longer accepting referral fees.
He said: “It most definitely is not a way around the referral fees for us, it is about offering a complementary set of legal services which we are allowed to offer for the first time having gone through what is a very rigorous process to get authorised by the SRA.”
Newman added that the company was looking to expand its legal services division beyond personal injury, and has launched a new will-writing service.
He said: “We are looking at a full suite of legal services that are relevant for our customers.”