Direct Line Insurance and the 'Little Red Telephone'

In 1985 a man named Peter Wood had the foresight to see that the combination of:

• Massive countrywide advertising
• Computers
• Phones
• and the investment of a large company to underwrite insurance

would clean up a High Street market that was financially restricted by overheads and a soft approach to selling.

He had the idea of setting up the ‘Call Centre’ that would handle the same kind of car insurance business that dozens of High Street would handle, but at the fraction of their overheads.

The idea worked and the market was changed for good. Peter Wood had a vision and it worked.

In 1985 ‘Direct Line’ (The Little Red Telephone) was born and soon prospered. Peter Wood had convinced the might of the Royal Bank of Scotland to underwrite the risks and in return he visioned a multi-million pound turn over. He managed to set up a Call Centre that now cut out the middleman, saw and used new technology, and was very much customer orientated.

The age of the call Centre had begun and the market was to be once again revolutionised.

Competition was soon to come and many others could only praise the foresight of Peter Wood before jumping on the bandwagon themselves.

Insurance Direct History

Many Call Centres were established based on the Broking principle, but Direct Line were not Brokers they were the Insurers. This meant that they only offered their own product. One price, one product to suit the callers needs.

The practicality of the Call Centre meant that overheads could be slashed and an entire company could be managed under one roof.

The Call Centres took a large proportion of the Motor Insurance Market but, although hit hard the High Street Broker didn’t completely disappear. There are many people who, still today, like to visit the trusty face at their local brokers office. Some like to see the face over the counter and preferred not to use the telephone.

The advantage the High Street Broker has over the Call Centre is knowledge of the area. In many circumstances the man behind the counter will have knowledge of his local area and may be able to judge what kind of a ‘risk’ his potential customer might be.

The Call Centre will be taking calls from all over the country (Dependent on where the advertising was focused). This often leads to poor risks being accepted on behalf of the Underwriting Insurer. Insurance Companies, like any Company in business, are looking to make profit. If you sell their product and you make them a loss through poor decision and risk taking they may turn round and refuse to let you sell their products. This is the big risk that many Brokers have to take.

As you might have expected, Direct Line soon became the largest Motor Insurer in Britain.

With the development of the Call Centre, traditional High Street procedures were dramatically simplified. Administration became simple and everything could be done over the telephone, even payment. Another development occurred in the Call Centre, the introduction of the Telesales system.

In the past the customer would walk into the High Street Broker and walk out with cover. People didn’t shop around and they would rely on their trusty High Street Broker to find the best cover for them.

With the development of the Call Centre and everything being done over the telephone, the customer now had more freedom to shop around. Therefore it became essential that sales principles were implemented into the telesales staff doing the original quotes for the callers. Sales staff were employed on a basic rate of pay plus commissions for achieving targets in selling policies because the market was now becoming competitive.

Back to the History of Motor Insurance

Today you can still use the same concept as the original Direct Line idea of call centre technology to get your cheap car insurance but nowadays the whole process is slicker and more effective. Find me cheaper car insurance now!

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