Direct Line has announced plans to cut approximately 550 jobs as the insurer faces ongoing challenges in a difficult trading environment.
This move comes as the company also reports a loss of 71,000 own-brand motor customers in the third quarter, a decline partly attributed to an average 3% increase in motor premiums compared to the same period last year.
Despite these customer losses, Direct Line reported a 5.5% rise in gross written premiums over the first nine months of the year and has reiterated its medium-term financial targets.
The firm also noted that it aims to manage costs and stabilise its customer base, particularly in the motor insurance segment, which remains critical to its overall performance.
Matt Britzman (pictured above), senior equity analyst at Hargreaves Lansdown, noted that Direct Line’s job cuts are part of an effort to address both internal challenges and broader market conditions.
“Cutting costs is one angle of attack to try and bring performance back on track, the other angle must come from stabilising the customer base, especially in the all-important motor division,” he said.
“Another 71,000 own-brand motor customers were lost over the third quarter as premiums were 3% higher than last year on average. The good news is that the rate of decline in customer numbers is slowing, as insurance prices are now starting to come down after some mammoth hikes were put through earlier in the year.”
He added that Direct Line has struggled over recent years with a challenging motor insurance market and operational issues that have affected its performance.
Direct Line’s new leadership team and refreshed strategy, which includes a re-entry into price comparison sites, represent what Britzman described as the “best version” of the company in recent years.
However, he cautioned that it remains uncertain whether the insurer will be able to achieve all of its current strategic goals.
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