The increase in car repair costs and the higher accident rate due to increased mobility already have a negative impact on Línea Directa's results. The insurer lost 5.2 million euros in the first quarter of the year, compared to a profit of 24 million a year earlier, and has launched a plan to respond to the particular perfect storm in its main business, automotive insurance.
In the information sent today to the CNMV, Línea Directa indicates that margins are under pressure throughout the sector and, above all, in motor insurance, despite the fact that premium income has risen by 5.3%, to 244 million, and the client portfolio has done so by 2.4%, to 3.4 million.
The accident rate has risen by 17% due to the increase in mobility. A year ago, he indicates, the omicron variable of the covid still caused a lower volume of transfers than that which occurred at the start of this year, in which traffic accidents have increased.
Added to this trend is a 7.8% increase in industrial prices, used as a reference in car repairs, and a 4.1% increase in the scales used to compensate for injuries.
The action plan with which the insurer wants to reverse this trend includes "individualized adjustment measures for risk premiums and loss cost management", that is, price increases based on customer profiles. Efficiency and diversification, among other aspects, will also be sought.
The increase in vehicle registrations, 44% in the first quarter, is one of the main reasons for the improvement in the number of company customers.
Home and life insurance increased at a rate of 6.7% and 4.2%, respectively, in terms of income, although Línea Directa is beginning to detect "symptoms of slowdown as a result of the increase in interest rates" in the housing market.
This year is presented as "a complex year due to the adverse inflationary environment, which continues to deteriorate the margins of the insurance sector as a whole and temporarily affecting the results of Línea Directa", indicates the CEO of the group, Patricia Ayuela.
"We are carrying out an ambitious action plan to increase our operational strengths and competitive advantages. All this, together with the solidity of our business model and the leadership of our brand, will gradually generate visible results in terms of benefits and profitability," he says.
