A recent sharp rise in motor premiums has been blamed by the insurance industry on ‘fraud’ but the accounts (for those insurers who publish them) suggest that something else is going on.

Only days after the Association of British Insurers said ‘pressure on premiums’ meant it was vital the government continues to tackle ‘frivolous injury claims’, the largest car insurer - Direct Line – reported a 10% rise in half-year profits.

Direct Line, which insures nearly four million motorists, made a £181m profit from the UK car insurance in the six months to the end of June, compared to £164m in the same period last year.

Not a penny of the extra profit is going back to the motorist - in fact the formerly RBS owned insurer said premium prices had risen 5.9% in the second quarter of the year compared to the same quarter last year - but there is to be another big dividend pay-out for the company’s shareholders.

In the notes to its accounts, Direct Line said ‘claims were in line with expectations’ but they had experienced ‘an elevated level of large bodily injury claims, in particular those between £100k and £1 million’ and ‘increased repair costs, used car prices and credit hire costs’. Fraud doesn’t get a mention.

“Whilst the government blindly or cynically swallows the Insurers line on fraud and restricts access to justice for people injured in accidents, motorists see premiums rise and shareholders line their pockets” said Tom Jones, head of policy at Thompsons Solicitors.

“Direct Line have a go at people who have suffered ‘large’ injuries and complain about repair, used car prices and credit hire costs but their silence on fraud – when their trade body the ABI goes on about it as if the whole of the UK are scamming at every level – is telling.”

“It’s clear – and has been for some time – that far from being deluged by frivolous claims and fraud the insurers are making ever increasing profits and paying out the proceeds in huge dividends to their shareholders.

“No wonder that since Direct Line announced its results last week, its share price has hit record levels as investors try to get in on the profits bonanza.”

The interim dividend is, in effect, a payment on account. Last year, Direct Line paid out a total of £401m in dividends. The next largest car insurer, Admiral, is due to announce its half year results and interim dividend next week.