Around 500 sales staff will go with the closure of a call centre in Stockton-on-Tees, near Middlesbrough, with the work transferred elsewhere in the UK.
Several hundred more jobs are being targeted across the country, including roles at the firm’s head office in Bromley and IT functions.
A spokesman told City A.M. that the reduction in sales staff was possible thanks to efficiency savings and a decline in the number of people who purchase insurance over the telephone.
“We have not made these proposals lightly and fully understand the impact this will have on our people,” said chief executive Paul Geddes, who last month pledged to cut £100m from his company’s annual costs by 2014.
Direct Line is currently owned by RBS, which is being forced to sell the subsidiary as one of the conditions attached to its government bailout. The bank has said it intends to float some Direct Line shares in October, despite the stagnant market for London IPOs.