Drivers are leaving Direct Line after insurance premium increases
Direct Line lost 434,000 car insurance customers last year after sharply raising premiums.
It said policies for own-brand car brands had fallen to just over 3.2 million at the end of March.
Premiums for those who renewed their policies rose by 38 per cent to an average of £515 per year, while for new customers they rose by 25 per cent to £599.
It is the latest headache for chief executive Adam Winslow, who has had to fend off a £3.1 billion takeover bid from Belgian suitor Ageas.
But investors shrugged off the setback and shares rose 1.3 percent, or 2.4 cents, to 191.1 cents – and is up 5 percent this year.
Price rises: Direct Line revealed in a trading update that car brand policy had fallen to just over 3.2 million at the end of March
Winslow is struggling to turn its fortunes around after a turbulent 2023, when former boss Penny James resigned amid a profit warning.
Direct Line later admitted it had underpriced policies and said it was unusually exposed to weather claims.
It has since increased car premiums to offset rising repair costs.
Winslow, who joined in March, is aiming to cut costs by £100m and has not ruled out job losses. He will announce a new strategy in July.
Yesterday’s update showed a more resilient performance in home insurance, with the number of policies falling from 2.5 million to 2.45 million, despite premiums rising 27 percent for new customers and 13 percent for existing policyholders.
Overall, gross premiums rose 11 percent to £892.2 million in the first three months of the year.
They rose by 18 percent to £424.3 million for car insurance and rose by 14 percent to £147.3 million for homes.
Bad weather led to around £33 million in claims. Winslow said: ‘We have seen a positive start to trading in 2024, with double-digit gross premium growth in our automotive, home and commercial businesses and overall growth of 15 per cent.’
With new managers recently announced, Winslow added: ‘I am confident that with the new leadership team we can achieve cost savings of at least £100m by the end of 2025.’
Keith Bowman, equity analyst at Interactive Investor, said Direct Line has “made a robust start to the new financial year.”