DIRECT Line Insurance yesterday reported lower profits for the first half of 2022 as rising inflation and uncertain economic conditions impacted performance.

The insurance company had a 47 per cent drop in operating profit to £195.5m from the first half of 2021 as it dealt with "challenging" market conditions and tighter regulations from the FCA.

Profit before tax tumbled 31.8 per cent to £178.1m with the company's gross written premiums falling 2.1 per cent to £1.5bn as inflation in the country climbed.

The UK motor market experienced "significant levels of severity inflation" in the first half of 2022, the company's performance report said. Market premium inflation has continued to "lag behind the increases in claims inflation" with overall motor claims severity inflation for 2022 estimated to be around 10 per cent.

This comes as the UK is experiencing record inflation at 40- year highs with the country facing a cost of living crisis.

The company's other business lines performed strongly and as expected, which the company said demonstrated the success of its diversified business model.

Direct Line Insurance will maintain its interim dividend of 7.6p per share.

(c) 2022 City A.M., source Newspaper