Leading car insurer increases dividends 23% but motorists pay higher premiums and concern grows about an ‘ethnic penalty’
Top car insurer Admiral is set to pay £174.7m in half-year dividends to shareholders in September after a 16% rise in revenue from UK motor premiums.
Despite the motor insurance market becoming, in Admiral's words, ‘increasingly rational’, motorists have seen premiums rise 17.2% in the last year. At the same time Admiral made a profit from UK car insurance of £219.2m in the six months to June 30, 2016.
Once again, as with other major motor insurers, Admiral’s report makes no mention at all of claims fraud being a problem, saying instead that it had been able to increase reserve releases ‘due to positive claims cost development in the first half of 2016’.
The announcement comes just a week after new research was published suggesting that, while all motorists are seeing average premiums rise, those living in multi-ethnic areas may be being hit particularly hard.
The study by data analysts WebberPhillips, which looked at car insurance premiums in general rather than specifically those set by Admiral, found that people living in areas of high ethnic minority prevalence face an ‘ethnic penalty’ in higher-than-average motor premiums of up to £458.
“There is no suggestion that insurers are deliberately discriminating, but there are real grounds for concern when a section of the motoring public are having to pay more for their insurance based on factors beyond their control at the same time as the insurers are posting ever-growing profits and paying out significant dividends,” said Tom Jones, head of policy for Thompsons.
“For years, we have been told car insurers are struggling because of fraud - described by one insurer as a ‘pandemic’ - but yet again not only is there no mention of fraud in this half yearly report from Admiral, the company actually says claims costs are moving in a positive direction.
“Admiral’s bumper dividend announcement comes just two weeks after Direct Line, another giant in the UK car insurance market, reported it would pay £200m in half-year dividends to shareholders come September. If some parts of the insurance industry talk up a “crisis” whilst others coin it in, it’s the consumer who loses out.”
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