Yet another source has predicted steep rises in motor insurance premiums this year. Admiral says its own hikes of 12% in 2009 look set to be followed by similar increases across 2010.
According to the firm, the increases are needed to go further towards offsetting the pressures caused by settling compensation claims. Commenting on the story, a spokesman for the Association of British Insurers said premiums across the industry were around 10% higher than they would otherwise be thanks to the effects of claims. This is above and beyond the effects of uninsured drivers and insurance fraud, both of which are also cited as reasons for higher premiums.
The Admiral announcement may not go down too well with customers when they learn that the firm's profits rose by 7% during 2009 to £215 million. As well as its main insurance line, the company also operates price comparison site confused.com.
Despite the profit increase, the firm says it has been hit by the success of rival comparison site Comparethemarket which has reported a three-fold increase in the number of visitors since the launch of its meerkat-based advertising campaign.
Ironically Admiral's announcement may prompt existing customers to use sites such as Confused.com to move to a rival firm. Even though it would get a cut from such a deal, that revenue is unlikely to make up for the lost business.