Thompsons’ head of policy, Tom Jones, discusses yet another example of insurers putting profits before people.
Shareholders in car insurance giant Admiral are set to get a bumper £164m pay out on Monday (June 1), despite regulators’ advice to suspend dividend payments during the COVID-19 crisis.
While other leading insurers have suspended their dividends, Admiral is to go ahead with a ‘normal’ final dividend of 56.3p that will see its largest shareholder – billionaire Henry Engelhardt – being paid £16m.
Admiral has suspended a 20.7p ‘special’ dividend, but increased its normal dividend by 15 per cent on the previous year’s 49.1p. The payment comes after Admiral announced a UK motor insurance profit in 2020 of £591million from insuring 4.37m vehicles - an average profit of £135 per vehicle.
This is yet another example of the car insurance industry putting profits before their customers – just as they did when they lobbied for the introduction of the Civil Liability Act, which will limit access to justice for millions of road users.
Tom Jones, head of policy at Thompsons Solicitors
“Here we are in the midst of a national crisis, with cuts in pay and jobs all over the place, and Admiral is lining its shareholders pockets to the tune of £164m,” says Tom Jones, head of policy at social justice law firm Thompsons Solicitors, which has long campaigned against the insurance industry’s pursuit of profits over fair treatment of customers.
“After nearly three months of much reduced car usage and fewer road accidents, Admiral has paid just £25 back to its policyholders. Presumably they think they can get away with a token gesture for customers while they are thumbing their nose at the regulators and paying out millions.
“And maybe they will get away with it because their policyholders, many of whom will have lost their jobs or been furloughed, will be grateful for anything. What they should have done is put this ‘profit’ to one side until they had worked out what should properly be refunded to customers.
“This is yet another example of the car insurance industry putting profits before their customers – just as they did when they lobbied for the introduction of the Civil Liability Act, which will limit access to justice for millions of road users.”
The Civil Liability Act, which was heavily campaigned for by the insurance industry, was due to come into force in April 2020, but has since been pushed back 12 months as a result of delays and the COVID-19 pandemic. The new rules will see the small claims limit for many road accident claims increase from £1,000 to £5,000, meaning injured people within that threshold (90 per cent of all people injured in road traffic accidents) having to pay for legal representation out of compensation meant for their injuries and losses, or take on the insurers without legal support.
The Admiral dividend fits with chief executive David Stevens describing the performance of the car insurance market leader in 2020 as being like a “freight train”.
Given that motorists have been paying an average of £809 for an annual car insurance policy in the first quarter of 2020 – six per cent more than in the previous 12 months – the exceptional performance is hardly surprising.
“It’s pretty brazen to plough ahead with a huge single dividend payment, while many of your customers will be struggling to pay their premiums because of COVID-19,” added Tom Jones.
“We have heard a lot recently about there being one rule for some and another rule for everyone else, and here we have Admiral either not getting that or arrogantly not caring about how this appears.”