Admiral Group Plc (LSE:ADM), the insurance provider, said it will keep on hiking prices, having already administered 20% increases in the first half of the financial year, following interims results on Wednesday.
Struggling with high inflation, which in turn ups the cost of car repairs, the insurer’s chief executive officer, Milena Mondini de Focatiis said price hikes “will just match that” of the inflation rate.
She said: "Costs are now somewhat stabilizing and we expect we can return to growth soon as the market catches up with price increases.
“We've seen inflation more stubborn than we thought in the first half of the year, so it's difficult to make a prediction, but we are more positive about the outlook."
Adding that last year's price hikes were “well ahead of the market”, the FTSE 100 boss said its motor insurance customer base had “reduced”, with its overall business having lost around 380,000 customers in the last twelve months.
No easy fix Source RepairSmith
“The bad news for consumers is that car insurance is now another inflated cost to try and manage as part of the ever-increasing pressures on income. Some customers have had enough, and Admiral saw a 7% dip in customer numbers over the quarter,” said Matt Britzman, equity analyst at Hargreaves Lansdown.
It’s “a loss worth taking” Britzman believes, arguing that a reduction in customers is a smart trade for maintaining profitable insurance contracts.
“Conditions are likely to remain tough over the rest of the year, but Admiral should be able to continue its string of outperformance versus peers with selective underwriting and strong pricing power,” he concluded.
Across the industry premiums have risen and analysis by the Association of British Insurers found that in June the average customer paid £511 for car insurance, 21% higher than a year before and largely driven by soaring energy costs, which added around £72 for every repair.
Shares in Admiral are currently 6% up on Wednesday, having opened at around 2,200p.