Car insurance giant Direct Line has announced plans to save over £100 million annually by enhancing its digital channels and automating processes. The move comes after the company declined 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 adjust support functions. While no specifics about potential job cuts have been shared, CEO Adam Winslow stated that employees would be consulted first.
The company aims to realise these annual savings by the end of 2025. In its latest results, Direct Line reported a return to pre-tax profit following a challenging period marked by increased motor cover claims due to colder weather and escalating costs.
The company posted a pre-tax profit of £277 million for 2023, a significant improvement from a loss of £302 million the previous year. This was largely driven by the sale of its brokered commercial business.
However, its operating loss expanded to £190 million, up from a loss of £6 million in 2022. Gross written premiums, which represent the total amount paid by policyholders, rose by over a quarter year on year to £3.1 billion, aided by higher prices.
Direct Line is based in Bromley and has regional offices in locations including Bristol, Gloucester, Birmingham, Manchester and Leeds.
The group's new boss says the company has not always handled tough market conditions well in recent years.
New chief executive Adam Winslow, who joined this month, 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 its cost base.
Direct Line rejected two takeover offers from Belgium-based rival 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 firm.
It said it is "confident" in its "standalone prospects". confident" in its "standalone prospects".
