Dec 20 (The Insurer): UK motor insurer Direct Line has started its move onto price comparison websites with the launch of three new products under its own brand.
In an announcement on Friday, Direct Line said it will initially begin selling via Compare the Market and intends to expand the availability of the new products on other price comparison websites throughout the course of 2025.
The three new products will offer a range of cover options from “essentials through to premium,” with distinct cover features such as digital-only servicing, excluding claims, Direct Line said.
The move fulfils a promise made by Direct Line’s management at the company’s capital markets day in July to reverse its previous stance and start selling insurance via price comparison websites, where 90 percent of UK consumers prefer to shop for motor insurance.
“It is exciting to be launching our iconic Direct Line brand on price comparison websites, enabling customers to buy Direct Line motor insurance through their preferred channel,” said Adam Winslow, CEO of Direct Line, in a statement on Friday. “We are delivering a key pillar of our corporate strategy, demonstrating how we can move at pace to meet the changing needs of our customers.”
A former Aviva executive, Winslow was appointed CEO of Direct Line in March this year with a mandate to turn around the struggling UK motor insurer after a difficult few years of trading.
In January last year, former Direct Line CEO Penny James resigned two weeks after the insurer had a profit warning and scrapped its dividend, which triggered a collapse of Direct Line’s share price and a wider selloff of UK insurance stocks.
UK motor insurers have been grappling with rising social inflation of claims since the pandemic and changing driving habits. Rampant inflation since the pandemic and the war in Ukraine has made it far more expensive to replace or fix cars and rate increases have not kept pace.
The prolonged weakness of Direct Line’s share price has led to the company becoming a takeover target.
Direct Line successfully rebuffed two bids from Belgium’s Ageas earlier this year before Aviva made its first offer in late November. The first Aviva offer was rejected by Direct Line’s board.
To avoid a hostile takeover, Aviva subsequently sweetened the terms of its £3.6bn ($4.51bn) bid to 275p per share, a premium of 73.3 percent to the last share price of Direct Line before Aviva made its first bid for the company in late November. This led to a preliminary agreement with Direct Line’s board, paving the way for the creation of a giant UK motor insurer with a market share of around 20 percent.
Direct Line will continue to trade as a standalone company until the merger with Aviva closes.
Shares in Direct Line were trading at 240.80p as of 12:25 in London on Friday, down 0.6 percent from the previous close. The stock is up over 30 percent this year due to the takeover bid by Aviva, giving Direct Line a market capitalisation of £3.16bn on the London Stock Exchange.
