By Sanjeeban Sarkar and Noor Zainab Hussain
(Reuters) - Rising British motor insurance premiums helped Hastings (L:HSTG) deliver a 22 percent rise in first half profit as people shopped around for policies, which the insurer said lifted its sales.
"Almost 70 percent of people in the UK who switch their motor insurance policy do so through price comparison websites, and we pick up about 11-12 percent of that business," Hastings' finance director Richard Hoskins told Reuters on Tuesday.`
The insurer, which mainly operates in the British motor insurance market, said its gross written premiums rose by 28 percent to 462 million pounds ($600 million) as a result of this switching during the six months ended June 30.
Hastings said adjusted operating profit rose to 86.5 million pounds, from 70.8 million pounds a year earlier.
A rise in vehicle repair costs, higher property damage claims per party and higher mid-range bodily injury claims were all factors driving up claims inflation, Hoskins said, which in turn pushes premium rates up.
"We have seen a reduction in claims frequency, basically less accidents and safer cars but an increase in severity of those accidents," he said, adding that claims inflation would persist along with the after-effects of a cut in the "Ogden" discount rate used to calculate personal injury claims.
The average price of UK motor insurance hit a record high in the second quarter of the year, driven by new rules for personal injury claims and a rise in the insurance premium tax, the Association of British Insurers (ABI) said.
Hastings also declared a dividend of 4.1 pence per share, while its solvency coverage ratio improved to 173 percent from 156 percent last year.
The company, which listed on the London Stock Exchange in 2015, offers private car insurance, home insurance, motorbike and van insurance and premium financing and ancillary products.
Hastings' rivals Direct Line (L:DLGD), Aviva (L:AV), RSA (L:RSA) and esure Group (L:ESUR) have also reported a surge in first-half earnings.
Shares in Hastings rose as much as 2.6 percent, before paring gains to trade up about 2 percent at 327.9 pence at 0804 GMT on the London Stock Exchange.