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The shareholders of UK’s largest car insurer are set to hit the jackpot today (Tuesday, 20 May) as Direct Line distributes a record £185m final dividend, bringing its total pay-out for 2013 to £309m.
The former RBS-owned insurer saw its operating profit from the UK motor market rise 33% to £348m in 2013 as the ‘claims environment’ proved to be far more lucrative than it had led everyone to believe.
Car insurance was, in fact, more than three times as profitable as any other line of insurance sold by Direct Line in 2013 and contributed 66% of the group’s overall profit of £526.5m.
Meanwhile, Direct Line’s customers saw motor premiums fall by a mere 3% in the year, according to the company’s own figures.
“The car insurers are taking us for fools,” said Tom Jones, head of policy at Thompsons Solicitors.
“One minute they are giving the impression they are victims of ‘compensation culture’, the next they are paying out record dividends.
“Along with their supporters in government, the car insurers have insisted that lower claims costs would be passed on to motorists in lower premiums. But the reality is that they are using the profits bonanza to pay mouth-watering dividends to shareholders.
“Thompsons is calling for action to make the car insurance market more transparent and to protect consumer rights. This is a compulsory purchase and the public has a right to be safeguarded against profiteering and market manipulation.
“And people who have accidents equally have a right to proper compensation. They should not be bullied into accepting derisory offers or stigmatised as ‘fraudsters’ just because the insurers want to keep these extraordinary profits flowing.”