Equality Laws Strike Insurance Price War
Shares for insurance company Esure have plummeted by 11% following the new rules to be imposed which will ban the sale of cheaper car insurance for women. The difference in insurance premiums started a row on gender equality, with people feeling that it’s unfair to charge a different price for a different gender. The ban has initiated more competition from rivals in the insurance market for female car insurance, causing Esure’s share price to drop. Esure’s ‘Sheila’s Wheels’ female-friendly brand enjoyed a pre-tax profit increase of 15.2% to £56.9 million, with premiums rising by 6.7% to £265.4 million. Esure’s chief executive Stuart Vann said he was pleased with these figures in such a competitive market.
However, the new gender equality rules are going to have a big effect on the Sheila’s Wheels brand, banning cheaper car insurance for female drivers. According to Esure, females have seen the biggest rate increases across the industry, especially for younger drivers. AA Insurance released figures in July showed that the average cost of comprehensive car insurance had dropped by 9.8% in the past 12 months. Esure said: “In the light of current conditions, the group now expects full year premium growth to be lower than that achieved in the first half of the year.” With Esure’s first 6 months of floating on the stock market, their interim dividend pay-out was 2.5p, which was below city expectations. Analysts from Shore Capital described the pay-out as ‘disappointing to the market’ due to it being ‘much lower than the consensus’.
Things have also been somewhat negative for Bupa in the recent months, who have seen UK insurance customer numbers drop by 2.8%. Around 60% of Bupa’s UK business stems from health insurance, with overall revenues for the first 6 months of 2013 reaching £1.26 billion. The slow economy and increase in competition are the culprits for the drop, but Bupa has increased their efficiency with a business re-structure and improved claim costs. An overall UK profit for Bupa was revealed, coming in at £59.2 million for the first half of 2013, which doubles the figures from 2012. Overall business in the UK has seen a drop in customer figures, going from 2.9 million to 2.8 million. However, revenue remained static at a flat £1.25 billion.
James Savery, 07 August 2013