There has been a harsh drop in the profits of the insurance industry, with Esure being one of the worst affected.
A drop in shares of nine per cent occurred to the insurance company, after an increase in the rate of accidents was highlighted.
The consequential spike in the amount of people claiming on insurance cut down on the profits made by Esure. It suffered a pre-tax profits drop of 13 per cent down to £103 million.
The combined operating ratio that Esure use measured the claims that they pay out, in addition to the expenses as a share of premiums. It rose 2.2 percentage points to 91.9 per cent for 2014.
A spokesperson for Esure said, “We expect the combined operating ratio trend in 2014 to continue in into 2015”.
If Esure continue on this trend, with profits, and shares, slumping, the other insurance companies are also likely to see similar patterns.
The question that undermines it all, however, is why the rates of claims climbed. It is theorised that the huge drops in the price of fuel recently has been a contributing factor, as well as better economic situations. More people have been able to afford to drive more, and so more people are crashing.
Eamonn Flanagan, an insurance sector analyst at Shore Capital said, “We think the claims ratio and loss ratio is steadily getting worse across the whole sector. Esure is just being particularly honest about it.”