Insurers Admiral, Direct Line tumble on premium financing woes

Insurers Admiral and Direct Line tumbled on Wednesday amid concerns of a potential clampdown on premium financing.

Traders pointed to a report in the Insurance Post which quoted the head of insurance at the Financial Conduct Authority as saying that premium finance was a "poor product".

In an interview with the Insurance Post, Matt Brewis warned that the regulator has "talked about it enough", hinting at potential action surrounding the practice in the next 12 months.

Brewis said he "wholeheartedly" agrees with those who label premium finance as a "poverty premium".

Premium financing is a practice whereby customers borrow money needed to pay an insurance premium and pay interest on the loan.

At 1230 GMT, Admiral shares were down 5.7% at 2,567p, while Direct Line was 5.6% lower at 169.47p.