Profits have soared at one of the UK’s biggest motor insurers after the impact of this year’s discount rate change on personal injury compensation payments turned out to be less severe than feared.
Direct Line also boosted its half-year dividend to shareholders by 39% after personal injury claims costs also continued to ‘trend more favourably’ than expected, the company said in interim results published today. The results will be cited by some solicitors as further evidence that the insurance lobby is crying wolf in calling for further reforms to the personal injury sector. In March this year, insurance bosses met chancellor Philip Hammond asking him to intervene after the then lord chancellor Liz Truss announced that the discount rate would be changed from 2.5% to -0.75%. Direct Line said at the time the move would wipe £215m-£230m off its pre-tax profits.