Direct Line lost 434,000 of its own-brand motor customers in the first quarter as the insurer increased its policy prices.

The group did however still report a 10.7% annual rise in total gross written premiums to £892.2m in Q1.

In its latest trading statement, Direct Line reported that its average premium for motor and home insurance stood at £599 for new customers and £515 for renewal customers in the first three months of 2024, compared to £478 and £373 in the same period last year.

The insurer said that motor claims trends had remained in line with its expectations during the quarter, with estimated written margins maintained above 10%.

Q1 also saw several periods of adverse weather which led to around £33m of weather claims in the group’s home insurance business, of which £24m was event related. This compared to Direct Line’s annual event assumption in its home business of £54m.

Direct Line CEO, Adam Winslow, said the group had seen a “positive start” to 2024 trading.

“Claims trends and motor margins continue to develop in line with our expectations,” Winslow commented.

“We have announced a number of significant hires over the last few weeks. I am confident that with the new leadership team in place, we can deliver run-rate annualised cost savings of at least £100m by the end of 2025 and a net insurance margin, normalised for weather, of 13% in 2026.”

Equity analyst at Hargreaves Lansdown, Matt Britzman, commented that Direct Line’s headline figure of a 35% rise in average premiums was “somewhat flattered” by better rates being offered to new customers.

“Anyone looking to renew motor insurance over the quarter was whacked with a 38% price hike,” Britzman noted. “These are necessary for Direct Line to get its motor insurance operations back to sustained profitability, and with a new CEO and an improving market, the motor business looks to finally have a footing from which it can grow. But that’s little consolation to policyholders.

“There’s still a long way to go if Direct Line wants to return a stable dividend and restore investor confidence. With takeover frenzy now backed out of the valuation, it looks like a more reasonable entry point. But there’s a lot to do if Direct Line wants to challenge some of the best operators in the sector.”

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