The UK’s second largest car insurers, Admiral revealed a 6% rise in half year profits from last year and has admitted over providing for claims from 2010 to 2012.
Admiral is set to distribute £134million to shareholders next month which the insurer has attributed to a ‘positive claims experience in the group’s core UK car insurance business’ and admitted there had been ‘improvements in the projected ultimate loss ratios especially for the 2010 to 2012 underwriting years’.
Admiral have effectively admitted overcharging customers and it should be the customers that receive this money and not the shareholders.
Paul Hinchliffe, Managing Partner at Bott and Co said: “Admiral have effectively admitted overcharging customers and it should be the customers that receive this money and not the shareholders. It is another example of insurers over-playing the effect of fraudulent claims on insurance premiums and getting found out.”
Many insurers are beginning to realise that April’s Jackson Reforms may not be as effective as they first expected. Mike Rogers, Chief Executive of Liverpool Victoria told the Financial Times “Essentially people are trying to project forward from reforms that have only just come in. Unless we do see some real benefits in terms of claims costs, we think it’s gone too far.”
Mr Hinchliffe added: “Insurers have had to exaggerate the effects of the reforms on motor insurance premiums in order to get them pushed through by the government. It seems now they are backtracking and after a supposed drop in premiums they will creep them back up, and yet again it is drivers who will lose out and insurers who will benefit.”
The Competition Commission will be conducting investigations into the insurance sector looking at insurers’ behaviour towards accident victims. It is possible fees charged for arranging replacement vehicles for accident victims will be banned.