Esure Group To Drive Up Car Insurance Premiums

Esure has warned it plans to increase the cost of car insurance premiums this year, after rising numbers of personal injury claims dented half-year profits.

The company, which owns brands including Sheilas' Wheels, had a trading profit of £3.3m for motor insurance underwriting between January and June - a fall of 80.7% compared to the same period 12 months ago.

Stuart Vann, the CEO of Esure, said: "The claims environment for the motor market continues to deteriorate and as a consequence we will seek to implement further rate increases in the second half of the year."

In its interim results report, it warned the impending cost hike could affect the number of policies taken by consumers in the coming months.

Across the Esure Group (LSE: ESUR.L - news) , underlying profit fell 21.3% to £46.5m - and share prices dropped by 11% at one point during Monday's trading.

The group recently snapped up the 50% stake of GoCompare it didn't already own - and pre-tax profits at the price comparison website stood at £13.4m from January to June, an increase of 25.2%.

Mr Vann's warning about rising premiums follows a recent AA report warning about claims inflation - with drivers making more frequent claims after accidents and seeking higher damages.

The AA's British Insurance Premium Index suggested that the cost of a comprehensive motor insurance policy has risen by 5.5% in the space of 12 months, following many years of falling prices.

At the time, the managing director of AA Insurance, Janet Connor, warned: "The days of cheap car insurance premiums are over, and price rises are inevitable."