It’s been a difficult start to the year for Direct Line. The company has paid £1 million worth of travel insurance claims as trips are cancelled due to coronavirus, and £35 million in home insurance pay-outs due to last month’s storms. Now it’s confirmed that it will cut 800 jobs as a response to customers preferring to interact with the firm online.
The Direct Line insurance group, which also owns the Churchill and Green Flag brands, said that the changes were necessary for the company to economise and “reflect changing customer behaviour”.
However, YouGov data shows that the changing customer journey for insurance isn’t unique to Direct Line, and that when it comes to buying financial products such as life insurance very few Brits prefer to buy in-store or over the phone.
More than two fifths of consumers purchase their financial products online, either completely from start to finish or at least for most of the buying process (44%). Almost a fifth of this group (17%) purchase solely online – from comparing options on comparison sites to completing their order.
While one in ten (11%) Brits say that they split their purchasing equally between online and offline, 9% prefer to shop for financial products mostly offline - and 13% do so entirely.
This preference for online purchases among Direct Line policy holders also reflects the views of the population, proving this changing customer behaviour is industry wide (45% shop online versus 11% offline).
YouGov data also shows that a fifth confess to rarely or never purchasing financial products highlighting that Direct Line’s potential market is already diminished (18%)*. Changing business procedures to better fit the needs of customers is therefore vital to remain profitable.
Almost four in ten of those who own a financial product with Direct Line are aged over 60 (39%), while another four in ten are aged between 40 and 59 (42%). Comparatively only 1% are aged between 18 and 24.
Considering almost six in ten 18 to 24-year-olds prefer to shop online rather than in stores (57%) and only three in ten trust insurance companies to act in their best interest (31%), appealing to this younger demographic could help Direct Line and other insurance companies to tap into a market that is currently less inclined to purchase insurance.
*Direct Line policy holders are able to rarely or never purchase financial products because that they may only hold one policy with Direct Line, or have not changed their policy for a long time.