Direct Line Insurance Group PLC (LSE:DLG) is poised to provide a half-year trading update on Thursday, 7 September, after being ordered to re-evaluate years’ worth of insurance payouts.
FTSE 250-constituent Direct Line was ordered to trawl through five years’ worth of claims payments by the Financial Conduct Authority (FCA) in late June over fears motorists were underpaid following accidents.
Direct Line subsequently announced settlements between 1 September 2017 and 17 August 2022 were being reviewed, with any potential pay-outs likely to be covered by the £1.5 billion stowed away in its motor claims reserve, as of December.
“The group does not expect the review to have a material financial impact in 2023,” Direct Line added, though a specific number is yet to be given.
Given motor insurance premiums have soared to record highs this year, any update on the extent of underpayments will likely be keenly watched in the upcoming update.
On the financial side, Direct Line penned adjusted gross written premium income growth of 8.4% to £771.7 million during the first quarter.
Growth of 3.3% in Motor to £358.7 million and a 2.1% rise in Home to £129.0 million were recorded respectively.
For the full year, the company anticipated ongoing challenges to continue but set a target of achieving a 10%-plus net insurance margin.