One of the UK’s fastest growing insurers today admitted hopes have been dashed of a swift resolution to the government’s controversial decision to slash the discount rate.
FTSE 250 firm Hastings had hoped ministers would reveal plans of how they will adjust the methodology for calculating personal injury payouts last week.
The boss of the insurer revealed his disappointment as Hastings revealed bumper half-year profits. Gross written premiums jumped by almost a third to £462m. Profits rose by 22 per cent to £86.5m.
A consultation on the discount rate finished at the end of last week.
“We were all in the office at 7am on 3 August because we were told to expect an announcement,” Hastings chief executive Gary Hoffman told City A.M..
“But later that day they [the government] said they have not got a timetable for when they are going to do it [adjust the discount rate]”.
In February, the justice ministry slashed the discount, or Ogden, rate from 2.5 per cent to -0.75 per cent. The move hit profits of insurers and sent share prices into freefall.
Within 24 hours, chancellor Philip Hammond pledged to review the decision, with a consultation launched.
Just like all consultations and government reviews, they tend to take longer than you expect. Obviously, the government is distracted by other things. We have no idea when it will be.
Hastings added a further 200 jobs in its Leicester offices during the first six months of 2017. It stole a march on its rivals by increasing its private car insurance market share from 6.2 per cent to seven per cent.
The firm tailors its policies to price comparison websites, through which around 70 per cent of car insurance is bought.
“We just have a winning business model compared with others.
As far as customers are concerned, car insurance, and to a lesser sense home insurance, is compulsory purchase. They don’t particularly like buying it.
He continued: “So what they want to do is buy on the device of their choice. And they want choice. They want to compare and people want a keen price.”