annual report 2007 - the Admiral Group plc

76 FINANCIAL STATEMENTSiii) Effective claims management:The Group adopts various claims management strategies designed to ensure that claims are paidat an appropriate level and to minimise the expenses associated with claims management. Theseinclude:· An effective, computerised workflow system (which along with the appropriate level ofresources employed helps reduce the scope for error and avoids significant backlogs);· Use of an outbound telephone team to contact third parties aiming to minimise the potentialclaims costs and to ensure that more third parties utilise the Group approved repairers;· Use of sophisticated and innovative methods to check for fraudulent claims.Concentration of insurance risk:The Directors do not believe there are significant concentrations of insurance risk. This is because,although the Group only writes one line of insurance business, the risks are spread across a largenumber of people and a wide regional base.B) Sensitivity of recognised amounts to changes in assumptions:The following table sets out the impact on equity at 31 December 2007 that would result from a1 per cent change in the loss ratios used for each underwriting year for which material amountsremain outstanding.Underwriting year2003 2004 2005 2006 2007 TotalLoss ratio 56.0% 62.5% 74.0% 86.0% 89.0%Impact of 1% change (£000s) 1,214 1,552 2,017 1,822 529 7,134The impact is stated net of reinsurance and includes the change in net insurance claims alongwith the associated profit commission movements that result from changes in loss ratios. Thefigures are stated net of tax at the current rate.