What’s really behind Aviva’s change of heart as it plans a return to the aggregators? And could this be connected to its sale of RAC?
Almost three years since pulling away from aggregators, Aviva is making a comeback. But why has the insurer had a change of heart? The price comparison market has coped well with the loss of Aviva in September 2008 and has continued to snap up market share. So clearly Aviva feels it cannot continue to push forward its direct offering without having a presence on the market-leading aggregators like Gocompare, Compare The Market and Confused.com.
When Aviva walked away from aggregators, its motive was to control its distribution costs. It was a bold move. It could have resulted in profitability in its private motor book improve. But it faced losing business volume in a tough market. So the insurer launched a service enabling customers to compare the products and prices of its rivals. It was a blatant snub of the aggregator model.
Aviva UK chief executive Mark Hodges now says the company doesn’t want to ignore the aggregator market. The performance of its own price comparison tool could well have prompted this move. But Hodges says the move is a “natural next step” for Aviva now it has sorted out its personal lines pricing and understands how it can underwrite profitability on aggregators – by creating a web-only offering that differs from its direct business. But it will not trade under the Aviva brand – a cautious sign if ever there was one.
How much is Aviva’s decision to sell RAC reflected in its return to working with aggregators? I would expect a lot. RAC has a major presence on aggregator sites so no doubt Aviva will be looking to claw back this lost distribution when it is eventually offloaded. Just look at Aviva's first quarter results today where motor was the catalyst for its 20% rise in UK general insurance net written premiums. Direct motor customers increased by 240,000 and the RAC Panel by 160,000 in Q1. It’s no surprise that Aviva has decided the aggregators are not to be sniffed at. But how long will this renewed love affair last?
Danny Walkinshaw, digital news editor.
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