DLG Motor results reflect ‘choices’

Direct Line Insurance Group plc (DLG) has issued its preliminary results for the year ended 31 December 2014 highlighting gross written premium (GWP) for the Motor division reduced by 5.6% and in-force policies reduced by 2.4%, compared with 2013.

In its statement, the insurer stated:

‘The motor insurance market was highly competitive with further premium deflation at the start of the year. As the year progressed premium rates flattened. The Group continued making choices designed to optimise value and prioritise underwriting profit over volume growth. Furthermore, the results reflected previous actions to reduce risk and manage claims costs. These have helped manage the business successfully through a dynamic and evolving regulatory landscape and competitive marketplace. Gross written premium for the Motor division of £1,342 million reduced by 5.6% and in-force policies reduced by 2.4%, compared with 2013.

‘For the Group’s Motor portfolio, overall prices increased marginally in the fourth quarter of 2014 compared with the same period last year, while risk mix reduced by one per cent. Gross written premium increased by 2.5% in the fourth quarter of 2014, as the Group’s prices were more competitive in a stable market, and the benefits from improvements in pricing capability continued.’

The statement continued:

‘In Motor, the three per cent deterioration in the combined operating ration (COR) principally reflects an increase in the loss and commission ratios. Reserve releases of £278.4 million in 2014 were driven primarily by continued favourable experience on bodily injury claims across recent accident years. This was partly attributable to benefits arising from the Group’s claims transformation programme as well as the Legal Aid, Sentencing and Punishment of Offenders Act reforms. The Group believes that it is currently outperforming the industry in respect of small bodily claims experience. The current-year attrition loss ratio deteriorated by 3.2% to 88.5%. This was primarily a result of higher costs for large bodily injury claims in the 2014 accident year, which the Group considers to be due to the intrinsic volatility in this type of claim.’

Under the headline ‘Emerging risks’ which the insurer defines as ‘consistent with the Solvency II definition in that it focuses on newly developing or changing risks that are difficult to quantify but may have a major or material impact on the business’ DLG listed ‘Big data’ and new car technology, for example, driverless cars as concerns.

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