Insurance company Direct Line Group has awarded a £20 million, business process services (BPS) contract extension to The Innovation Group (TIG) for subsidence claims.

Under the contract, the Innovation Group will continue to handle all of Direct Line Group's newly notified subsidence claims from December 2014 to December 2017.

The extension brings the total value of the contract from its start in August 2011 to £60 million.

The Innovation Group provides its services under a fixed per-claim pricing structure, which means that Direct Line only pays for services as and when they are needed.

John O'Brien, analyst at TechMarketViews, said: "TIG's model is a form of volumes-based BPS contracting, in which demand for services is dependent on the volumes of subsidence claims passed through from the client. These volumes are dependent on external factors like the weather, which could have a direct impact on the volume of claims TIG will end up handling.

"Because TIG backs up its model with reference data, it is able to mitigate the risks to its own business and to its client. We would like to see other BPS providers using data and analytics in this way to build transparency and certainty into BPS contracting - something evermore critical for suppliers today following recent scandals."

Earlier this year, Direct Line Group awarded Capgemini a five-year contract to design and deliver new IT infrastructure following its split from Royal Bank of Scotland (RBS).