Esure’s profits have dropped over 21%.

The company said it will drive up premiums in order to combat the surge surge in small injury claims.

“The claims environment for the motor market continues to deteriorate and as a effect we will seek to implement further rate increases in the second half of the year as we look to mitigate against these trends”, Chief Executive Officer Stuart Vann said in the statement.

The drop was in part due to profits in the firm’s motor insurance business falling 80.7% to £3.3m.

United Kingdom prices for new vehicle insurers increased 2.9 percent in the second-quarter from a year ago, the Association of British Insurers said in a report last month.

Mr Vann’s warning about rising premiums follows a recent AA report warning about claims inflation – with drivers making more frequent claims after accidents and seeking higher damages.

The firm sold 5.8pc more premiums in the first half of the year, totalling £275.5m, and now has 1.995 million policies in force.

Esure Shares were down 10 per cent in early trading, or 25.8p, at 239.7p.

Meanwhile, the company said it would “re-energise” the price comparison website Gocompare after snapping up the remaining 50pc of the site in March, in a deal that bought out its founder for a total cost of £96.2m.

“I am excited by what we have done so far at Gocompare and believe there are significant opportunities in the medium to long term to at least double its EBITDA in a five year period”.

Shore Capital analyst Eamonn Flanagan said the half-year results for the group were worse than he had expected and that the rate increases were likely to impact on business volumes.

The reason Esure are doing this, is because their half-year profits have taken a hit, thanks to an increase in personal injury claims. The number of injury claims reported has been increasing by about 10% a year since 2013, according to the AA.