How its new vision drove Direct Line Group’s pandemic response

The appointment of Penny James as chief executive of Direct Line Group (DLG) in May 2019 marked a change in direction for the insurance company. Her predecessor Paul Geddes had steered the business as it was spun out of Royal Bank of Scotland and floated on the London Stock Exchange in 2012, but now its previous strapline and vision needed to evolve.

Geddes’ strategy had focused on making insurance much easier and better value for DLG’s customers, but James wanted to create a vision that would rouse the whole organisation going forward and shape its new strategic objectives. It would mark the next stage in the Group’s evolution.

‘Penny took over and started to talk to members of our executive committee, senior managers and then our people on how they saw the future of the company,’ explains Lisa Tremble, the outgoing director of external affairs and sustainability. ‘We were really clear that what we wanted to achieve with our vision and purpose relaunch was a wider, deeper, galvanising vision for the company as well as something that was customer-focused.’

The conversations took place over five months, and ultimately involved finding the right set of words for a vision that effectively encapsulated everybody’s views. ‘We want to create a world where insurance is personal, inclusive and a force for good,’ adds Tremble. ‘We felt that these covered lots of different elements for different stakeholders.’

‘So, for our people, inclusivity and being a force was good was really important. For our customers, that more fractional, personalised insurance offer… inclusive, making sure you’re including everything that they need. When we started to go through each of our stakeholders to see how our vision applied to them, we felt that it was sufficiently challenging but also reflected what we thought would be the future: how people wanted insurance to be.’

Tremble concedes that there were difficult internal conversations about ‘force for good’. ‘Some people worried that if we turned down an insurance claim, somebody would say we were not a force for good because we hadn’t paid out. Some people felt worried about being so bold to say that insurance is a force for good,’ she adds. There were concerns about making such statements while the Financial Conduct Authority was conducting a review into pricing principles in the industry, amid claims that loyal customers were being penalised rather than rewarded every time they renewed their policies. (The FCA has since proposed that customers renewing home or motor insurance pay no more than they would if they were new to the company.)

Once you have a vision about being personal, inclusive and a force for good, it does change the nature of the conversation.

‘Actually, insurance is a force for good. For every customer you turn down, there’s tens of thousands whose lives you change. So, I think there’s a strong argument to say that the very nature of insurance means that you are a force for good. Obviously there are things within the industry that could be better. And we need to change those.’

The new vision feeds directly into Direct Line Group’s new purpose, strategic objectives, sustainability pillars and values. Tremble claims the articulation of its purpose is simple ‘and just reflects what people believe insurance should do – which is to help them carry on with their lives, giving them peace of mind now and in the future.

‘But also, for me, having that vision and purpose really created the right platform to build our sustainability strategy. It also helped to change the way that people thought as a Group. Previously, business decisions were always front of everyone’s minds. Once you have a vision about being personal, inclusive and a force for good, it does change the nature of the conversation.

‘If you are taking a decision to do X – are you still living up to that vision? If the answer is no, then you need to have a good discussion about that decision in order to protect yourself against reputational risks in the future. You may well decide to go down that path, but that whole process of challenge means – I think – you make better, more sustainable business decisions.’

James unveiled DLG’s new vision and purpose, alongside its six strategic objectives and five sustainability pillars, at its first Capital Markets Day in November 2019 – six months after her appointment – which took place in Doncaster, home to the insurance company’s call centre. ‘It’s run by a fabulous leader called Ryan and is just bubbling with energy and people wanting to help customers. I feel like our vision landed well. It was that crystallising moment where people understood what the future would look like for us,’ adds Tremble.

‘I think having clarity of focus around vision and purpose is quite a galvanising force. When you’re chatting to stakeholders, you have a pretty strong narrative about who you are, what you stand for, how you’re creating long-term value for all your stakeholders and how that ecosystem is all so interconnected.’

And then, just four months later, Covid-19 hit. ‘We had just delivered our full year results at the start of March and were beginning to get a sense that Covid was going to change everything But, my goodness, wasn’t it great to have force for good as part of your vision at that moment in time?’ says Tremble. ‘It enabled us to have those wider conversations about what we want to do and why we want to do it.’

The insurance company immediately put its vision into action, applying it to each stakeholder group as it worked through the appropriate way to bring it to life. Its three main priorities focused on protecting its people, supporting its customers and making a difference in its communities.

‘What was the right thing to do for our people? We sent them home. Within a week, we went from a company where everybody worked in an office, including 7,000 in call centres, to one that had the majority of its employees at home. If they didn’t have the kit at home, we sent it to them,’ explains Tremble.

Direct Line protected all employees’ jobs and pay during the first lockdown, made a commitment not to furlough anybody and even re-employed those colleagues who had recently left but found they did not qualify for furlough with their new employers. ‘We also gave people maximum flexibility. You could really see how ‘personal’ and ‘force for good’ came through in how we handled our people and our customers,’ she explains. ‘By eight weeks in, we had implemented more than 40 measures across the company to give customers extra value.’

Direct Line offered refunds for car insurance and travel policies, waived cancellation fees and allowed payment deferrals. It also offered free rescue cover and free home emergency cover for NHS workers, who were also promised that their claims would be fast tracked.

And finally, it set up its first community fund, handing £3.5 million to charities throughout the year, as well as donating £3.6 million to the ABI Covid Support Fund, which was established by the industry’s trade body in May 2020 to support those hit hardest by the virus.

Tremble believes that DLG’s new purpose and vision provided a framework, against which it is hard to push back. ‘In these situations, there are lots of competing demands for resources and limited time to make decisions,’ she explains. ‘The fact is that it was written down in black and white. We have a five-pillar sustainability strategy. We are going to be a force for good. It wasn’t like Can I have some money for society? It was How much are we going to put in society this year? If we hadn’t had something that hard and clear cut, would I have got that £7 million signed off so quickly? Maybe not. Maybe it would have been a harder process. This simplified things and made it absolutely clear that if we want to live up to our vision, this is what we can do.’

Within its first six weeks of operation, the Direct Line Group Community Fund, which Tremble ran, had donated £2 million to charities supporting the most vulnerable in society. Many operate within communities where Direct Line, Churchill, Green Flag and Privilege’s biggest sites are located, but several national charities – such as Mind, whose donation supported an additional 40,000 calls – were chosen to represent its auto service repair sites.

Having clarity of focus around vision and purpose is galvanising. When you’re chatting to stakeholders, you have a pretty strong narrative about who you are, what you stand for, how you’re creating long-term value for all your stakeholders and how that ecosystem is all so interconnected

One donation particularly resonated internally. Charity Kids Out was able to buy boxes of toys and activities for more than 5,000 children living in domestic violence refuges, as well as provide e-food vouchers for their families. ‘The feedback we got from our people was that it made them so proud. It was so powerful because people felt sad and helpless. Just having those proof points, and being a part of something like that, was, I believe, really important for the mental wellbeing of our people as well,’ says Tremble.

Indeed, the fund’s second phase focused on small, local charities and Direct Line’s people were invited to nominate their favourites. A further £500,000 was distributed to 180 charities that they had named, while in the third phase – in which the fund donated £1 million to create positive societal impact – they were asked to nominate local food and hygiene banks to receive monies.

This year, the community fund has received £1.5 million. As Tremble puts it: ‘It’s still a substantial amount. It’s not as much as last year, but that’s absolutely fine. Not every year is as extraordinary as 2020.’

Tremble believes that one of the lessons to be learned from last year is how individual decisions can have a huge impact on others in a way that, perhaps, had not been considered before. For example, people who chose not to wear masks or those who broke lockdown rules may have, in part, prolonged the Covid-19 crisis. Those individual decisions impacted millions.

‘As a business that has 11,000 employees, decisions we make will have a knock-on impact on those people, their families and on the communities where they live. The decisions we make have an impact on our shareholders, on pension funds and, I think, opening up the whole ESG debate about what sort of role you want to play as a business is really important,’ she says. ‘If you want to build your reputation, then you’ve got to be thinking these things through and deciding how you are going to play your part in solving some of the big problems we are going to have moving forward.

‘It’s about making sure the whole ecosystem supports each other. If you treat your customers badly in their time of need, then you are not going to be a force for good. You’re not giving them peace of mind and they are going to walk. But people will remember those who helped them and that’s how you build brand loyalty. You’re doing the right thing because it is the right thing to do, but also because it does make good business sense. Opening up that conversation in the past probably got a few naysayers.’

This view has been borne out by the numbers. An Opinium survey found that 70 per cent of Direct Line’s customers had been positively impacted by its actions, while one in five adults are more positive towards the brand and 19 per cent claimed they were more likely to consider the insurance company in the future.

Tremble believes that these conversations will only gain in importance as the economy starts to re-open. ‘Businesses do have to think about what role they are going to play in the recovery of this country. Having a vision, a purpose and long-term sustainability strategy is a framework to think about these things. They will drive better societal decision-making,’ she concludes.