Aviva to invest in digitalising broker channels

Aviva’s UK chief executive for general insurance Colm Holmes has confirmed that the insurer plans to invest in digitalising its broker channels to “deliver great outcomes to our commercial customers”.

Speaking to Insurance Times yesterday, following the publication of Aviva’s 2019 full-year results, Holmes said: “One of the things that we’re very much committed to is that we want to digitalise more of our business.

“Where we’ve got to in our direct business, we have a fantastic platform, award-winning MyAviva app, but I want to digitise our broker channels, so the significant amount of the digital investment going forward will be specifically aimed at our broker partners to digitise that part of our business.

“That is our fastest growing business as well, so I think what we’re committing to is that we want to invest in those relationships and those partnerships and then work together with our brokers to deliver great outcomes to our commercial customers, and the growth we’ve seen is very much driven by that broker channel and we want to build on that.”

Phil Bayles, intermediaries managing director at Aviva added that the insurer has already invested in its commercial lines products alongside its direct distribution – its online commercial business, for example, grew by 12% in 2019.

Bayles said this demonstrates that Fast Trade, the platform that delivers commercial products to brokers, is having a positive effect.

Talking on this growth, Bayles said: “We’re pretty confident we can carry that on through 2020.”

Bayles added that 75% to 80% of Aviva’s commercial lines business is placed through brokers.

General insurance update

Investment objectives aside, Holmes described Aviva’s 2019 general insurance results as a “mixed story”, with profits falling by 5% from 2018.

This, in part, is due to Aviva changing its financial calculations regarding the placement of amortisation. Holmes added that the firm’s general insurance figures have also been impacted by the inclusion of Aviva’s UK digital (UKD) arm.

Holmes explained: “While [combined operating ratio (COR)] 97.9% is disappointing on the face of it, if I take out the impact of UKD and the impact of amortisation, which again is the movement from below to above the line, the COR actually dropped to 95.2%, so that 95.2% is a very impressive number and that’s just with UKD taken out at 2.7% and there was another 0.9% of amortisation that went into that number, so it’s in the 94%s.

“That said, within that business we had our commercial lines business grow at 7%, which is hugely impressive, and deliver a COR 96% and our personal lines business has shrunk by 4% and delivered a COR of 99.3%.”

Globally, the general insurance picture is a lot rosier, due to improvements in Aviva’s Canadian business.

“From a general insurance perspective globally, I’m very pleased with the operating profit increase of 20% when I look at like-for-like [2018] with [2019] and that’s mainly driven by a significant turnaround in our Canadian business, which had not been operating at the level we wanted, but I’m very pleased to see that it’s now delivering back in the 90%s in terms of COR from where it was at 103% the previous year,” Holmes added.

The year ahead

The focus for 2020, therefore, lies in maintaining commercial line growth, while bolstering personal line performance.

“For 2020, we have high expectations that commercial will continue to deliver very high single digit growth and deliver similar margin, given the hardening that is taking place in a number of the lines,” Holmes said.

“In personal lines there is a requirement, obviously, improve the profitability of that business and return it to growth and that’s very much what we’re focusing on for 2020.”

Coronavirus concerns

But, what about the ever-present coronavirus risk that is stealthily making its way up corporate agendas?

In terms of broker awareness of how coronavirus could impact insurance coverage, Bayles said: “Brokers are pretty switched on to wordings. I don’t think there’s been any surprises for them or any concerns. People have talked around the issues.”

He continued: “I think we’re all concerned around the impact on the economy and the day-to-day operations of businesses. Brokers are concerned about those as well, but they haven’t raised any concerns around wordings.”

Holmes, on the other hand, believes speculation at this point is foolhardy as it is simply too early to determine an accurately realistic picture of coronavirus-related losses. He said it would be more prudent to wait until the impacts on businesses, individuals and transport had become more evident.

“It would be wrong to speculate on what scenarios could play out,” he said.

“It’s something we’re discussing with brokers as well and I think that until this develops further, there is no realistic number that you could put on it that would make sense.”