![]() ![]() The main risk I can see is that Direct Line won’t handle changing market conditions as successfully as some of its rivals. I also expect rising interest rates to help insurers, as they should be able to earn higher returns from investing their premium cash. Over time, I think Direct Line’s strong brand and market share should help to repair its profit margins. Although some parts shortages persist, I’m confident this situation will gradually improve. Reports I’ve heard from the motor trade also suggest that used car prices are starting to fall. In August, Ms James said that new policies were now being priced at the company’s target profit margins. The good news for shareholders is that insurance price rises are now being pushed through. Other UK insurers have reported similar headwinds. ![]() ![]() However, this has been a problem across the sector. Direct Line boss Penny James admits that the firm was caught out by surging inflation and was too slow to increase its prices. ![]()
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January 2023
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