Insurance giant Admiral says it will offset the £15m lost through the referral fee ban through savings on the cost of claims.
The insurer of more than three million vehicles in the UK was expected to take a significant financial hit when the fees were banned in April.
Half-year financial figures up to the end of June, released yesterday, estimate the company will lose around £3 per vehicle it insures.
The report said: ‘Admiral expects this reduction in revenue will be offset by reductions in claims costs.’
The group is also confident it will emerge unscathed from the Competition Commission’s review of the car insurance market.
Admiral earned £7.3m in credit hire referral fees in the first half of 2013, but the group says further reductions in claims costs will offset any losses incurred after the review.
Earlier this year Admiral entered into joint ventures with law firms Lyons Davidson and Cordner Lewis to form Admiral Law and BDE Law. Both ventures were granted alternative business structure status by the SRA.
The ventures will allow Admiral to administer a claim throughout the process and, the company claims, offer an improved service.
But the financial report makes clear that new and proposed reforms to the handling of bodily injury claims mean the businesses are ‘not expected to make a material contribution to group profits in the foreseeable future’.
In UK car insurance alone, the group recorded turnover of £924.5m in the first six months of 2013, a fall on the same period in 2012 of 10%.
But underwriting profits more than doubled compared with the first six months of 2012, from £31m to £69m. This was partly driven by a 30% cut in the cost of insurance claims.