Direct Line is set to cut around 550 jobs as its looks to "create a leaner and more efficient operating model".

The insurance firm said it is looking to deliver £50m in cost savings in 2025.

It comes as the company, which owns brands including Churchill and Privilege, said that the motor insurance market had seen “competitive” trading conditions, with written premium and associated fees from operations growing by 11.4%.

Hargreaves Lansdown highlighted that Direct Line lost 71,000 own-brand motor customers in Q3. Across its motor and non-motor divisions, the firm recorded premium growth of 2.9% and 12.9%, respectively, in the same period.

Chief executive officer at Direct Line, Adam Winslow, said: "We delivered double-digit premium growth year on year in motor, home and commercial direct. However, we are in the early stages of a significant turnaround and our Q3 trading is not yet fully reflective of the actions we have taken.

"In motor, trading conditions have been challenging although we continued to grow policy count on price comparison websites and have worked at pace on the launch of the Direct Line brand in this channel.

"We are making good progress against our gross cost savings target, with around £50m expected to be delivered in 2025 from improvements in procurement, technology rationalisation and simplifying our operating model."

Looking ahead, Direct Line said it will continue to target between 7% to 10% compound annual growth in gross written premiums and associated premiums between 2023 and 2026 in non-motor.

The group also reiterated its net insurance margin target for ongoing operations, normalised for event weather, at 13% in 2026.

Senior equity analyst at Hargreaves Lansdown, Matt Britzman, added: "It’s no secret that Direct Line has struggled over the past few years to deal with a challenging motor insurance market, and operational missteps have weighed on performance.

"But armed with a new leadership team, a more refined strategy, and new growth angles like the relaunch on price comparison sites, this looks like the best version of Direct Line for some time. Whether it’s able to deliver all that’s promised remains to be seen."

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