Sheilas' Wheels owner esure said it was planning to drive up premiums after a surge in small injury claims had seen half-year profits in its motor insurance underwriting business fall by four-fifths.
Shares dropped nearly 9% as the fall helped underlying pre-tax profits for the first six months of the year slide 21.3% to £46.5 million
Trading profit for motor insurance underwriting was down 80.7% to £3.3 million as it was "impacted by claims inflation, in particular the market increase in the frequency of small personal injury claims".
Chief executive Stuart Vann said: "The claims environment in the motor market continues to deteriorate and as a consequence we will seek to implement further rate increases in the second half of the year as we look to mitigate against these trends."
The group has more than 1.4 million motor insurance policies and about 570,000 in home insurance.
Mr Vann's comments about increasing car premiums come in the wake of a recent AA report showing they had risen by 5.5% in the second quarter across the industry after years of decline.
The same report also pointed to claims inflation – more frequent claims with higher damages.
Half-year profits for home insurance at esure were up 31.5% to £7.1 million compared with a period last year when it took a £2 million hit due to bad weather.
Meanwhile, pre-tax profits at price comparison website Gocompare were up 25.2% to £13.4 million after esure snapped up the 50% of the business it did not already own.
Mr Vann said there were significant opportunities to at least double the website's underlying earnings over five years.
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 cheapest cars to insure
Esure to raise premiums after injury claims soar
Price new: £5,995
Dacia has made a big impact in the UK with its line of affordable motors.
The Sandero is the foundation of the brand's offering and is famed for being the UK's cheapest car.
With a group two insurance classification it's also one of the cheapest cars to insure right now.
The entry level Access model is sparsely equipped, but it has a practical interior, big boot and low running costs.
Price new: £8,060
The Seat Mii is a small city car which Auto Express praises for its spacious interior, good build quality and supple ride.
All models are in insurance group one, bar the group two Sport version.
The Mii is available in three-door or five-door styles, but both measure just 3.5 metres, making it perfect for getting around town.
Price new: £8,090
The Skoda Citigo was crowned Auto Express Best City Car 2013.
The magazine praised its low running costs and practicality as well as its grown up driving experience.
Like its Mii stable mate the Citigo has group one insurance in all apart from its top specification model, making it one of the cheapest cars to insure.
Price new: £8,265
The third of the Volkswagen's group of three city cars to make the list is the Up!
Auto Express says the Up! was 'born to rule' city streets with its small dimensions and lightweight body.
There's three versions of this fun city car; Take Up! has a group one rating as does Move Up! while the higher spec High Up! gets a group two classification.
Price new: £8,345
The Hyundai i10 is another car which can get you a cheap insurance quote thanks to a group one insurance rating across all the 1.0-litre petrol models.
Auto Express says the new 2014 i10 offers big car features in a small package. And for £8,345 you also get Hyundai's five-year warranty and roadside assistance package.
Price new: £8,995
Vauxhall has managed to squeeze one of its full sized Corsas into insurance group two.
Auto Express says the 1.0-litre ecoFlex model has the lowest insurance costs of any mainstream supermini.
The eye-catching design, solid interior and big-car features make it an appealing buy for drivers.
Price new: £9,575
The Smart car caused a bit of a stir when it first appeared thanks to its dinky dimensions and bold two-seat layout, making it very useful for driving about town and absurdly easy to park.
The Smart ForTwo is the latest incarnation, which keeps to the same formula; it still has only two seats and is one of the smallest cars on the road measuring just 2.5 metres long,
The entry level 0.8- and 1.0-litre models qualify for group two insurance.
Price new: £11,810
The Peugeot Partner Tepee 1.6 VTi is the passenger version of the Partner van and according to Auto Express easily the most spacious new car that currently qualifies for a group two insurance rating.
It's got a boxy shape that provides plenty of room and has sliding doors which make it a very practical and flexible family car.
If you're after something smaller the Peugeot Bipper Tepee, which is the smallest of Peugeot's family of Tepee MPVs, also gets a group two insurance rating.