THREE of the biggest motor insurers in the UK saw their share prices fall yesterday after Confused.com and Towers Watson reported a significant drop in premiums, greater than had previously been expected.
Direct Line, Esure and Admiral all saw a dip in shares of 2.26 per cent, 8.85 per cent and 0.57 per cent respectively, after the report announced year on year price drops of 19 per cent across the board.
The research found that the average price for comprehensive car insurance in the UK is now £596, compared to £736 in the same period last year. All motorists are benefiting, including young drivers, the research found.
While the news will have customers jumping for joy, there is concern that profits at the major motor insurers will be hit.
Oliver Steel, analyst at Deutsche Bank, warned the fall in premiums is “substantially worse than we had believed”. He added: “Despite the share price reaction, our suspicion is that actual trends amongst the quoted insurers are less bad than the latest index suggests.” He also highlighted the impact of telematics quotes, which could have distorted the results.
Eamonn Flanagan at Shore Capital added that competition in the market remains fierce.
“Good news for the consumer but grim reading indeed for the UK personal motor insurers. We reiterate our sell recommendations on Admiral, Direct Line and Esure with the grim news on rates compounded by the on-going regulatory fog surrounding the industry,” he said.