Direct Line costs fall as it migrates IT from RBS infrastructure

Direct Line has revealed that a number of IT initiatives have helped it reduce its costs and increase its profits.

In the first half of 2014, the insurer said that it continued to roll out its new data centres, voice and desktop tools as part of its IT migration from Royal Bank of Scotland Group (RBS) infrastructure. The migration, due to complete at the end of this year, was announced in January 2013, with Capgemini awarded the £100 million contract to carry out the work.

“The total cost base for the first half of 2014 was 5.4 percent lower than the first half of 2013 as the benefits from these initiatives began to emerge,” the company said today in its results for the six months to 30 June.

Telematics investment

As part of its business transformation, Direct Line said it was investing in telematics to become a “leader” in this area, and in improving its digital channels.

“Our performance has allowed us to continue to invest in the future of our business, to enhance our product propositions and improve our customer experience,” said Paul Geddes, CEO of Direct Line Group.

“We have rolled out self-install telematics boxes, which will enable us to reward better driving, and we’ve made it easier to buy our motor products on smartphones and tablets.”

Direct Line launched its self-install telematics product in the UK in April, following a successful pilot. It has also bought a stake in The Floow, the supplier of smartphone applications and telematics data analytics for the Direct Line DrivePlus telematics product range.

“This supports the group’s strategic aim of being a leading operator in developing the telematics market and enables it to offer telematics to a broader range of customers,” it said.

Better website

It said that one in five of under 25-year-olds taking out new Direct Line insurance policies choose to use telematics, which increases to more than half of new business sales to under 21-year-olds over the phone.

The company said that it has also finished rolling out its new smartphone and tablet-optimised customer websites for its motor business, which has led to higher sales.

“The number of customers starting a quote and completing a sale on the new websites has increased significantly by 18 percent,” it said.

“The group continues to invest in improving its systems to enhance the customer experience,” it added.

Direct Line reported a pre-tax profit of £225.1 million for the first half of 2014, up 7.8 percent compared with the same period last year (£208.8 million).

In February, Direct Line Group warned that the ongoing separation of IT from the Royal Bank of Scotland presented a risk of systems failure.

Migration from RBS’ systems has created problems for others in the past. Customers of Tesco Bank were unable to access account information in 2011, following its move from RBS’ infrastructure onto a Fiserv Signature bank platform.

Copyright © 2014 IDG Communications, Inc.

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