Drivers warned of insurance rise
Updated on 30 July 2008
Motorists could have to get used to higher car insurance premiums, the owner of Elephant.co.uk and Diamond has announced.
Admiral, which has more than 1.5 million UK customers, said there was a "real prospect" of premiums rising faster than claims for the first time in seven years due to a stronger pricing environment across the wider market.
In the first half of 2008, its premiums were 3% higher than a year ago - although this is around half the 5-6% increases seen more widely.
Premiums have been virtually flat in the past five to six years as insurers have used more of their reserves to help keep a lid on prices.
But the industry has seen sharp rises since April although these were not passed on by Admiral, helping it to boost the number of UK cars insured by more than 11% to 1.48 million.
In the first half of the year, Admiral said pre-tax profits rose 16% to a record £100.3 million - ahead of the £95.5 million expected - pushing shares up 6%.
Cardiff-based Admiral is better placed than most firms to cope with a potential recession due to the reliance on cars. The board does not expect growth and profitability "to be significantly impacted" by the tougher economic climate.
David Stevens, the group's chief operating officer, said: "A car for most people is a necessity, not a luxury, so demand is not going to fall off a cliff as it will in other sectors."
Mr Stevens added that factors such as dearer petrol prices - leading to lower car usage - were also a boon for the firm as they led to fewer claims.
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