By: 12 August 2013

The Direct Line Group has revealed that it received £6.1m in referral fees from solicitors in the first half of 2013 and another £8.1m in credit hire fees.

The insurer, in a half year earnings report, said that its profits rose by 27.8% in the first half of 2013 to £287m, compared to the same period last year.

Analysing 2013’s civil justice reforms – the referral fee ban, 10% uplift in general damages, end of recoverability of additional liabilities and reduced RTA portal fee – the group said that the changes were “expected to be broadly neutral to operating profit in 2013 for the group”.

However, it predicted that the extension of the Portal and potential reforms to combat whiplash fraud would bring a positive effect to Direct Line’s profits in the medium term, leading to a potential prolonged fall in motor insurance premiums.

Paul Geddes, CEO of Direct Line Group said that the insurer had continued to price costs based upon the group’s observed claims experience, which was “favourable”.

“In the second quarter, this has helped us to reduce premium rates overall about 3% year on year, contributing to a stabilisation of our policy count,” he said.

But Geddes struck a note of caution, saying that the full effect of the reforms would take time to materialise.

“Their ultimate impact is difficult to predict as it will depend on a change in the behaviour of claimants and lawyers,” he said.