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Direct Line’s Online Auto Insurance A Success

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U.K. automobile insurer, Direct Line, a subsidiary of Royal Bank of Scotland (RBOS), announced a startling success for its 9 month old online automobile insurance venture , www.directline.com. with about a 40 percent market share. Direct Line has about 15 percent of the total market for auto insurance in the U.K.

The insurer, who pioneered direct telephone sales of auto insurance 9 years ago, is also leading in the Internet sweepstakes. It estimates that about 8 percent of its new business is now from on line contacts, compared to 3 to 4 percent for most companies. Direct Line’s goal of obtaining a 15 percent market share for on-line insurance within three years appears eminently reachable.

The company is also keeping premium income up while at the same time limiting increases. Direct Line’s profit rose to £20 million ($31.2 million) for the first half of 1999. Meanwhile its operating ratio improved from 19.5 percent to 105.8 percent in the same period, and company forecasts indicate that it may go below 100 percent for the entire year.

While increases in rates have averaged 12.5 percent so far, these are well below those of other insurers, and Direct Line has attracted 400,000 new customers as a result. It estimates that it keeps about 90 percent of its customers.


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