One major weather event has hit insurer Direct Line hard.
Releasing its trade update for the first quarter of 2018, Direct Line Insurance Group plc said claims related to the recent cold snap in the UK are likely to cost around £50 million post-tax – the expected amount easily a huge chunk of the allocated budget for weather claims for the whole year.
“The group’s current assumption of a normal annual level of claims costs from major weather events in 2018 is approximately £55 million for home and £20 million for commercial pre-tax and before profit commission,” said Direct Line, which also reported reduced gross written premium (GWP) in the first quarter compared to the same period in 2017.
From its £810.3 million GWP in last year’s first quarter, Direct Line posted a decline to this year’s £769.9 million. In addition, the insurer cited a £48.8 million fall in premiums following its exit from the Nationwide and Sainsbury’s partnerships.
“The freezing weather earlier this year hit many drivers, households, and businesses hard, and I am proud of the way our people helped our customers during this difficult period, demonstrating the value of our insurance cover and service,” commented Direct Line Group chief executive Paul Geddes. “We estimate the claims associated with the major freeze event will utilise the group’s full annual weather budget.”
Met Office chief forecaster Andy Page previously described the so-called ‘Beast from the East’ as the coldest that parts of the UK have seen since at least 2013.