Car insurance giant Admiral is to give shareholders another bumper pay out after admitting actual claims costs had been much lower than its projections over a period of four years.
The insurer of more than three million UK motorists will pay an interim dividend of 51p per share in October at a cost to the company of £140m following what its chief executive called “a pretty ‘up’ first half.”
Admiral saw its profit from the UK car insurance rise 6% to £219.2 million in the first six months of the year thanks to premium increases and the release of extra cash from reserves due to lower than expected claims costs.
The company said actual accident pay-outs over the period since 2011 had been ‘significantly’ better (i.e. lower) than its projections and promised there was likely to be more to come if claims develop as expected because its reserves include even more of a buffer than they did this time last year.
News of Admiral’s lucrative returns comes only two weeks after Direct Line, the UK’s largest car insurer, reported a 10% rise in half-year profits and awarded shareholders a £69.5 interim dividend.
Despite all this good news for insurance company shareholders, the Association of British Insurers has signalled there will be no let-up in its attack on access to justice for injured people, referring at the end of July to the need for the government to continue to deal with a so-called ‘compensation culture’ and allegedly ‘frivolous’ personal injury claims.
“No amount of profit seems enough to satisfy the car insurers,” said Tom Jones, head of policy at Thompsons Solicitors.
“They are already reaping a rich harvest from the new fixed cost Portal regime introduced by a government that is bending over backwards to be friendly to them, and yet they want more.
“It really is extraordinary that they are being allowed to get away with selling the myth that they are victims of large scale fraud, while at the same time telling their shareholders how great the claims environment is and paying out ever-bigger dividends.
“The costs in the Portal are unrealistic, punitive and set by the insurers to suit themselves.
“The benefits of it for the insurers are obvious to anyone who reads their financial statements, and yet they blithely raise motor premiums relying on a smokescreen they have themselves created.
“It’s time for MPs of all parties to come together to protect motorists and accident victims not the insurers who clearly profit from it handsomely. Car insurance is a captive market, and there should be a fair and transparent system for regulating it.”