Direct Line, the car insurance giant, has announced plans to save over £100 million annually by strengthening its digital channels and automating processes. This comes after the company turned down a takeover bid from another insurer.
The savings will be achieved through technology and digitisation initiatives, as well as simplifying the group’s structure. Direct Line already operates an online claims hub for motor customers and launched a car management app last year.
The firm also intends to simplify operational complexity and right-size support functions, aiming to achieve these annual savings by 2025.
After a challenging period marked by higher motor cover claims due to colder weather and rising costs, Direct Line reported a return to pre-tax profit last year.
The company posted a pre-tax profit of £277 million for 2023, a significant improvement from a loss of £302 million the previous year, largely driven by the sale of its brokered commercial business.
However, its operating loss widened to £190 million, up from a loss of £6 million in 2022. Gross written premiums, which represent the total amount paid by policyholders, increased by more than a quarter year-on-year to £3.1 billion, boosted by higher prices.
The new chief of Direct Line admitted that the company had struggled to manage volatile market conditions successfully in recent years.
Adam Winslow, who became the boss in March, stated: “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”, which he said included cutting costs.
Direct Line turned down two takeover offers from Belgium-based competitor Ageas earlier this month.
The higher potential 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 company. It said it was “confident” in its “standalone prospects”.
