Pre-tax profit growth was limited to £298.5 million in the six months to 30 June, 5.2% higher than a year ago. This was largely because of a 17% fall in investment returns and being billed £24 million for the new flood tax. It was also hit for £13 million by claims linked to the weather.
Gross written premiums increased by almost 4% during the period, thanks to a 2.5% rise in car policies as it was able to pass on policy price hikes to motor insurance customers for the first time in years.
Comparison websites have proved a benefit for consumers to get better deals, and have aided smaller insurers to steal market share from the bigger players.
The rise is the result of increases in the insurance premium tax and a spike in small claims, such as for whiplash.
The Churchill, Green Flag and Privilege-owner also recommended a 10p a share special dividend alongside a 4.9p interim payment.
Direct Line has enough capital to protect itself from the risks it carries. It reported a Solvency II capital ratio of 184%, well above the 100% minimum.