Group says frequency of motor insurance claims is lagging even as drivers return to the roads
" Chief executive Penny James put the lag in the claims down to more people working from home, leading to fewer of the “bumps” typical of the commuter rush.
“It’s difficult to tell for certain, but we don’t really believe that claims frequency will ever return to 100 per cent of what it was pre-pandemic, or certainly not in the near future,” she said, citing the change in working patterns wrought by the pandemic."
The group’s operating profits rose to £370m in the first half, up from £265m in the same period last year and comfortably surpassing analysts’ forecasts. Benign weather also helped keep a lid on home insurance claims in the period. Claims and expenses as a proportion of premiums for 2021 would be 90 to 92 per cent, Direct Line said, an improvement on its 93 to 95 per cent medium-term target. It announced a 7.6p dividend, up almost 3 per cent on last year’s. "
Ian Smith FT 3rd August 2021
DLG are certainly outperforming EY's predictions for the sector s a whole.
"While the UK motor insurance market reported its best underwriting profit in 2020, with a net combined ratio (NCR) of 90.3%, in 2021 and 2022 the sector is expected to make losses, according to professional services firm EY.
Its latest UK motor insurance results predicts that the sector’s NCR for 2021 will be 103.7% due to underlying inflation. This will also cause a NCR of 112% for 2022.
In my article "Auto insurance, digital maturity and how to transform it" I described the Altus DigitalBar analysis of UK auto insurer's digital maturity. in 2020 it placed DLG in 5th= place alongside Ageas, Aviva and Quote me Happy.
To give a balanced view I did research each insurer's eFNOL and Quote and Buy customer experience for 2021 and the digital transformation taking place. DLG has built on that maturity with further transformation across the Quote and Buy to the Claims aspects of motor insurance.
That may be one reason that claims and expenses as a proportion of premiums has improved to 90% to 92%. A major paper by McKinsey "Capturing Value from the Core" describes how insurers can square the circle of increasing customer satisfaction, efficiency and effectiveness .
Digital transformation is for the benefit of customers, claims teams and the insurers bottom line. It may be a good time to look at "Auto insurance, digital maturity and how to transform it" and the technology partners that can help achieve these goals.
Altus will be publishing the 2021 DigitalBar ratings in the autumn so it will be interesting to see how DLG and its peers stand in the digital maturity rankings.
One of Britain’s biggest motor insurers has reason to celebrate a casualty of the pandemic no one will miss: the angry commuter. Despite the mileage clocked by drivers returning to pre-pandemic levels, the frequency of claims on policies is lagging, Direct Line said on Tuesday, as the insurer reported better than expected profits for the first half of the year.