Direct Line prepares for the future: Job cuts as part of the restructuring plan

The British insurer Direct Line has announced plans to cut around 550 jobs, which represents about 6 percent of its workforce, to save 50 million pounds next year. The insurer, one of the largest providers of car insurance in the UK, is struggling with the sharply increased costs for claims following the pandemic. In its latest quarterly report, the company announced a decline in premium volume and announced comprehensive cost-saving measures to create a "leaner and more efficient operating model." The majority of the savings will come from job cuts, explained CEO Adam Winslow in an interview with the Financial Times. The reductions will not only impact a specific business area but will also be supported by improvements in procurement, technology simplification, and streamlining of the operating model. In recent years, Direct Line has raised prices for car and home insurance to offset the rising claims costs caused by inflation. In its recent trading statement, Direct Line reported a 35 percent decline in gross premiums in the third quarter, particularly in the weakening motor insurance sector. Despite the challenges, the company is sticking to its growth plans of 7-10 percent for non-motor sectors. Direct Line also plans to place its main brand on price comparison portals for the first time to compete with cheaper competitors. Analysts from Citi see the restructuring as on track and assess the latest information as positive. The views of Peel Hunt suggest that 2024 is considered a transition year for a recovery in 2025.