Total gross written premiums in the third quarter were 0.8% lower than a year ago at £851 million with weakness in the retail motor and home business rescued by the Green Flag recovery business and commercial sales.
The firm said it saw ‘some improvement’ in motor and home sales on price comparison websites, but a drop in new car sales and fewer young drivers entering the market combined with ‘modest premium deflation’ left motor premiums, which make up more than half of total sales, down 2.3% to £447 million.
Home insurance fared slightly better with own-brand sales rising 1% but partner sales dropped 6.6% leaving group premiums down 1.3% at £157 million.
Green Flag was a bright spot, registering a near-10% increase in sales, but in absolute terms it was too small to move the needle.
Fortunately, commercial revenues rose 10% to £136 million thanks to a pick-up in demand from small and medium businesses and the roll-out of Churchill on the four biggest price comparison websites, which drove a 65% increase in sales.
However the firm is taking ‘a more measured approach’ to the roll-out of its core Direct Line and the Churchill brand onto its new motor platform, while it says it is ‘too early to outline the impact’ of the Financial Conduct Authority’s probe into renewal policies with the consultation period not due to conclude until the end of January.
The FCA published its final report into renewal pricing in September with the recommendation that existing customers pay no more than new customers when they come to renew their insurance, putting an end to ‘price walking’ and other ‘harmful pricing practices’.
The insurer said it expected to deliver a full year combined operating ratio ‘slightly below’ its target range of 93% to 95% but acknowledged that in the medium term its ability to control operating costs would depend on the duration of the pandemic, the impact of Brexit and the FCA’s recommendations on pricing.