Drivers abandon Direct Line after insurance premium hikes
Direct Line lost 434,000 car insurance customers over the past year after it sharply hiked premiums.
It said its own-brand motor policies fell to just over 3.2million at the end of March.
Premiums for those renewing their policies climbed 38 per cent to an average £515 a year while for new customers they rose 25 per cent to £599.
It is the latest headache for chief executive Adam Winslow, who has had to fend off a £3.1billion takeover bid from Belgian suitor Ageas.
But investors shrugged off the setback and shares rose 1.3 per cent, or 2.4p, to 191.1p – and are up 5 per cent this year.
Price hikes: Direct Line revealed in a trading update that its own-brand motor policies fell to just over 3.2m at the end of March
Winslow is battling to turn around fortunes after a turbulent 2023, when previous boss Penny James stepped down amid a profit warning.
Direct Line later admitted that it had under-priced policies and said it had been unusually exposed to weather claims.
It has since raised motor premiums to make up for the soaring cost of repairs.
Winslow, who joined in March, is aiming to cut costs by £100million and has not ruled out job cuts. He will announce a new strategy in July.
Yesterday’s update revealed a more resilient performance in home insurance, where the number of policies fell from 2.5million to 2.45million, despite premiums going up 27 per cent for new customers and 13 per cent for existing policy holders.
Overall, gross written premiums were up by 11 per cent to £892.2million in the first three months of the year.
They were up by 18 per cent to £424.3million for motor insurance and climbed 14 per cent to £147.3million for home.
Bad weather led to around £33million of claims. Winslow said: ‘We have seen a positive start to 2024 trading, with double-digit gross written premium growth in our motor, home and commercial businesses and overall growth of 15 per cent.’
With new executives announced recently Winslow added: ‘I am confident that with the new leadership team in place, we can deliver cost savings of at least £100million by the end of 2025.’
Keith Bowman, equity analyst at Interactive Investor, said it Direct Line ‘made a robust start to the new financial year’.