The car insurance giant said the savings will come from technology and digitisation initiatives and from simplifying the group’s structure
Direct Line aims to slash costs by £100m a year as it boosts its digital services after fending off a takeover bid from a rival insurer.
The car insurance giant said the savings will come from investing in tech and digital channels, as well as simplifying its business structure. It already has an online hub for motor claims and a car management app launched last year.
The firm also plans on “simplifying operational complexity” and “right-sizing support functions”. It hasn’t said if this could lead to job losses but boss Adam Winslow said the company will talk to staff first.
It aims to make the yearly savings by the end of 2025. Direct Line revealed in its results that it returned to a pre-tax profit last year after a difficult period, as it was hit by higher motor cover claims amid colder weather and rising costs.
It reported a pre-tax profit of £277m for 2023, up from a loss of £302m the previous year, driven by the sale of its brokered commercial business. But its operating loss widened to £190m from a loss of £6m in 2022.
Gross written premiums, meaning the total amount paid by customers who have an insurance policy, surged by more than a quarter year on year to £3.1bn, helped by higher prices. Direct Line’s new boss, Mr Winslow, has admitted the insurance company “has not always managed volatile market conditions successfully in recent years”.
He said: “While the picture has improved, we need to do more to drive performance and we have identified immediate actions we can take in 2024 to create value”, including reducing costs.
Direct Line rejectedtwo takeover offers from Belgian-based rival Ageas earlier this month. The higher offer valued the business at around £3.1 billion, but Direct Line said it thought the bid was “uncertain, unattractive, and that it significantly undervalues” the firm. It says it is “confident” in its “standalone prospects”.
