Insurance giant Direct Line has announced plans to cut approximately 550 jobs, representing 5% of its workforce, as part of an aggressive cost-cutting strategy aimed at reviving the troubled insurer’s fortunes. The announcement coincides with disappointing third-quarter results showing a significant decline in the company’s customer base.
The FTSE 250 company reported a stark reduction in in-force policies from its continuing operations, dropping nearly 5% year-on-year to 8,975,000 by the end of September. Total gross written premiums and other fees plummeted to £705.1 million from £1.1 billion in the previous year, though the company attributes this partly to accounting methods related to its Motability partnership.
Chief Executive Adam Winslow, who took the helm in March, emphasised that the turnaround strategy remains in its early phases, noting that current trading figures do not fully reflect recent strategic initiatives. The comprehensive review affecting job cuts will span across all business segments, marking a significant shift in operational structure.
The insurer’s recent troubles stem from its failure to adequately respond to escalating claims costs, driven by surging second-hand car prices and spare parts inflation. These challenges led to multiple profit warnings between 2022 and 2023, culminating in the departure of former CEO Penny James following the dividend suspension in January 2023.
The company recently fought off a £3.2 billion takeover attempt from Belgian insurer Ageas and has since restored its dividend payments. Under Winslow’s leadership, Direct Line is implementing revolutionary changes, including the landmark decision to list its main brand on price comparison websites for the first time, alongside targeted cost reductions of £100 million by the end of 2025.
Market analysts at Jefferies have expressed concerns about the timing of Direct Line’s restructuring efforts, noting that motor insurance premiums appear to have peaked. The company’s shares reflected market sentiment, closing down 2.7% at 160½p, highlighting ongoing investor uncertainty about the insurer’s recovery trajectory.
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