Referral fee ban could cost company £6m
UK motor rate declines will slow in 2013 after dropping “materially” in 2012, according to Admiral co-founder and chief operating officer David Stevens.
However, he added that insurers should not expect a return to rate rises this year.
Admiral reported in its 2012 results this morning that it cut rates by about 6% in 2012 across both new business and renewals.
Speaking to journalists after the release of the 2012 results, Stevens said that the Confused/Towers Watson Index indicated that the cheapest motor rates on price comparison sites had fallen 13% over the year.
He said: “For 2013, I don’t expect the same level of premium deflation, but nor do we expect a return to premium inflation at this point in the cycle.”
Ancillary prospects
Admiral also reported that net ancillary income had fallen 6% to £170.9m in 2012, from £181.5m in 2011.
Admiral chief financial officer Kevin Chidwick said that this was a one-off effect from an accounting change. The company now accounts for a portion of what it once considered ancillary income in another line.
But there is a chance that the ancillary income could fall further in 2013 because of the bodily injury referral fee ban being introduced in April.
Chidwick said: “We said that we are maybe going to lose a couple of pounds per vehicle covered because of the net impact of accounting changes and the personal injury referral fee ban.”
Admiral insured £3.02bn vehicles in 2012, meaning that a £2-a-vehicle reduction would amount to £6m.
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