The impact of COVID-19 is clear for all to see in the latest financial results update from Direct Line.
The UK motor insurance giant has reported a drop in Q3 gross written premium from its motor direct brands – slumping from £440.5 million in the same period last year to £434.2 million this time around. Meanwhile, GWP from its motor partnerships dropped from £17.3 million to £13 million, representing a 24.9% fall.
Its home insurance segment performed better with direct own brands increasing by 1% to £112.8 million, albeit home partnerships suffered a 6.6% drop to stand at £43.8 million.
“We are encouraged by our trading performance in Q3 where we saw a return to strong growth in Green Flag and commercial and some improvement in motor and home own brands, particularly in the price comparison website channel as customer shopping activity started to recover,” said CEO Penny James (pictured). “This progress is testament to the flexibility and commitment of our people who have been successfully navigating through the COVID-19 pandemic, delivering good operational progress, providing extra support for our customers and helping local communities.
“Direct Line and Churchill remain scheduled to start to roll-out on our new motor platform this year, albeit we are taking a more measured approach to implementation,” she added.
The group believes it is on track to deliver a combined operating ratio slightly below its target range of 93%-95% in 2020, normalised for weather. It highlighted that a lot will depend on the duration and uncertainties of the COVID-19 pandemic and the Brexit transition, as well as the FCA’s investigation into pricing practices.
“While still early in the consultation period, the FCA report into pricing practices has proposed significant changes to the way the market operates,” said James. “As we outlined at our Capital Markets Day in 2019, we have been actively reviewing renewal prices over recent years. There will be uncertainty to navigate during the transition, however we believe that our market-leading brands and outstanding customer service, combined with our model of operating across multiple channels, are fundamental strengths meaning that we are well placed to deliver success in the future.”
Overall, the group slipped from £858 million to £851.5 million in total, during Q3, while in-force policies dropped from 14,837 to 14,644.
