Report on Direct Line

Contents Page
Introduction 3
Executive Summary 4
Factors explaining the success of Direct Line 5
Market shares and Level of Sales in the Insurance Sector 7
Pest Analysis: 10
SWOT Analysis for Direct Line 13
Conclusion: 16
Bibliography 17
Appendices.......................................................................................................…........18

Introduction

As analysts of Coopers and Lybrand we have been asked to analyse the Financial Services Industry. We have been asked to analyse and research the Insurance sector focusing on the Direct Line PLC as an example of one of the leading players in this particular sector.

In this report we aim to:

• Establish the factors that explain the success of Direct Line.
• Establish market shares and level of shares
• Main external factors that make an impact on the Insurance sector.
• SWOT analysis of Direct Line.

Insurance companies have had a quite a tough time across most sectors in the recent past, although the performance of the domestic motor and property insurance sectors has improved over the last few years as claims rates have settled and premiums have gradually increased. However, price competition in certain areas is now threatening to create a softening in the market and will mean worsening operating ratios.

The general insurance industry has also faced a new set of challenges from January 2005 onwards with the Financial Services Authority (FSA) taking over the regulation of the market. This means that there will be new rules and regulations that they are not used to and will have to adjust to the new authority. All companies and broker operations are now obliged to register with the FSA. The arrival of General Insurance Day was predicted to strengthen the bond among brokers but this has not really been the case so far. Insurers have been concerned about the rising cost of compliance, although the changeover to the FSA has been fairly faultless to date.

Executive... [continues]

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