Coronavirus and big storms to cost insurer Direct Line at least £35m

Figures follow announcement that around 800 jobs will be cut

Insurer Direct Line Group has said the UK’s recent winter storms are set to cost it at least £35m, while it revealed a £1m bill so far for coronavirus travel claims.

The Churchill and Green Flag owner said the outbreak of the virus – known as Covid-19 – could have an impact on its travel business results this year, while the disruption in equity markets could knock its investments and affect the speed of claims payouts.

Direct Line said: “Like all businesses, we are subject to the consequences of disruption to financial markets and global supply chains which, over time, could impact the performance of our investments and the cost and speed of fulfilling customers’ claims.”

Most coronavirus claims so far cover cases in which customers were due to travel to countries where the Foreign Office has advised against all but essential travel.

On the winter weather impact, the group said the claims estimate so far covers storms Ciara and Dennis, but added it was “too early” to assess claims from most recent storm, Jorge.

Details of the claims hit came as the company reported a 12.2 per cent drop in pre-tax profits to £509.7m for 2019.

Its annual figures also follow the group’s announcement last week that it is cutting around 800 jobs and closing one of its sites in the UK as part of a drive to cut costs by £50m.

The job cuts will affect almost 7 per cent of Direct Line’s 11,000 workforce, and are set to take place largely between 2021 and 2022.

It said it was looking to target savings through greater use of self-service and “digitalisation”.

The results show it saw falling policies and premiums – down 2 per cent at 14,789 and 0.3 per cent to £3.2bn respectively – after the planned exit of home insurance partnership contracts for Nationwide and Sainsbury’s, while it also suffered in a competitive motor insurance market.

But with the impact of partnerships stripped out, policies grew 1.4 per cent and premiums were flat.

Penny James, chief executive of Direct Line Group, said: “We have delivered a good set of results, and continued to improve the quality, while navigating a difficult motor market and delivering significant change in the business.”

Press Association