Direct Line Insurance Group PLC (LSE:DLG) has reassured that it does not expect a large financial hit after being ordered to review five years’ worth of car and van claims.
“The group does not expect the review to have a material financial impact in 2023,” Direct Line said in response to press coverage.
FTSE 250-listed Direct Line was ordered to review claims settlements made between 2017 and 2022 by the Financial Conduct Authority (FCA) earlier this week.
Customers who received “unfair settlements” should be provided with “the appropriate redress”, the regulator said.
Direct Line initially responded by admitting a “minority of customers” had been granted lower pay-outs than they should have been.
According to the FCA, some motor insurance customers were found in December last year to have been paid less than the fair market value of their cars after they were written off.
“An estimate of potential payments the group will make as a result of the review was provided for within the group's 2022 financial year-end claims reserves,” Direct Line added on Thursday, with a total of £2.6bn reportedly being held at the time.
£1.5bn of this had been set aside for outstanding motor insurance claims meanwhile, according to the company’s full-year results.