How Ageas will be brokers' best friend - Middle and Clarke interview

Brokers are still the lifeblood of the Ageas business – around 80% of Ageas’s business comes from intermediaries.

Brokers complain when insurers move in and out of markets, but Ageas has been pretty dependable as the brokers’ long-term friend.

Long may it continue, say Ageas chief customer officer Ant Middle and chief underwriting officer Adam Clarke.

During an interview with Insurance Times, Middle and Clarke, appointed to their roles in January, explain how a reinvigorated Ageas is on the front foot and hungrier than ever to do business with its core market of brokers.

There have been several management changes, which we’ll come to in a bit, but the message is that Middle and Clarke in their new roles are here to listen to brokers and help solve their problems.

Middle says: “We are very much focusing on making sure we are having the right conversations with our broker partners.

“In particular, making sure we’re available and ready to respond to opportunities that the team are finding.”

Clarke says it’s vital to have a ‘can do’ mentality on the Ageas underwriting team. Not to give up easily, he says, but keep on with the conversations so hopefully an agreement can be reached that suits both Ageas and the broker.

Clarke says “It’s about how do we have the appetite to start trading again. That’s where I’m trying to get the underwriting, in conjunction with Ant’s team, to think about solutions. How do we build solutions for brokers that are a win-win for both parties?”

If brokers want an example of the type of deals that can be done, the £45m five-year deal with independent broker Darwin Clayton is a good one.

Darwin Clayton is showing what it means to be a modern independent broker, having created Darwinsure – a website where tradesman and professionals can get quotes in less than 60 seconds.

Middle says: “That that is a concrete example of what we are really good at. 

“We have the support of a fantastic broker there, in a business area that suits us and suits the broker really well, where we can offer something unique to the customers.”

Ageas’s big changes  

Middle and Clarke’s new roles coincided with several management departures, the most senior being Francois-Xavier Boisseau, who headed insurance, to create a more accountable management structure.

With fewer customers buying over the phone, Ageas has also had to change its service operations.

The Stoke-on-Trent call centre will close. The Port Solent call centre is also shutting, with 80% of staff transferred to nearby Eastleigh.

Meanwhile, the sales and service operation in Eastleigh is also being closed; it will be consolidated into the Gloucester office.

The IT and infrastructure teams will transfer to Tata Consultancy.

“We’ve been working really hard on simplifying what was a pretty complex business,” Middle says.

“There’s also some really exciting stuff, investing in the things that will make us really fit for the future.

“Making sure that we’ve got all the right capabilities in all the really important areas of our business – data, digital, people with the right skills in the right places.”

Middle says Ageas’s partnership with Tractable, an artificial intelligence insurtech that assesses damage and predicts repair costs, is a good example of partnering with data-rich innovators.

Having the right data, digital and people will certainly be needed for what currently are tough trading conditions in personal lines motor. Claims inflation is running, some estimate, at 5% to 7%.

Yet premiums are only rising by about 2%, with a number of Ageas’s rivals reporting deteriorating combined operating ratios. How does Ageas cope with such difficult conditions?

Clarke says: “The market is probably seeing higher claims inflation than most people thought for 2019.

“It’s all about being disciplined. While other people might only put in 1% (rate increases) that will ultimately have an impact on their results.

“That’s where us as underwriters really have to earn our money. We have to try and get that right, without affecting our top line too much. It’s about being clever.

“We are putting in rates in. That is a sensible thing to do. You have to keep funding for claims inflation.”

Another potential fly in the ointment for private motor insurers is the FCA’s crackdown on dual pricing. But Ageas has less exposure here than some rivals. This is because Ageas business is won largely by brokers, and Ageas itself does not put in any price optimisation – leaving that to brokers.

For the direct part of Ageas, Clarke says: “We do have the direct business and the direct business has price optimisation

“So there is some difference between new business and renewal pricing, but again what we have been doing is talking about that in terms of a new fair price framework.

“We put that in the first quarter of this year, where we have agreed some constraints, some caps and collars, on year-on-year price increases.

“That’s now been implemented, we are comfortable that is a good representation of being fair and not excessive, in terms of the words the regulator uses.

“In addition to the work we have been doing on the fair price framework, we have been testing new propositions.

“In the RIAS business we had a two-year fixed product. We have also done things like Ageas Elastic, where again, that’s a monthly premium product and does not have a renewal rise as an inflation linked price increase.”

As well as personal lines, Ageas is keen to grow in commercial lines. A new commercial underwriting team has been recruited. Martin Hyde will be based in the north region, John Thompson in the midlands, Tim Griffiths in the south west and Jason Leist in the south east, it was announced last month.

Middle says the new team members will complement the well-known faces among the Ageas team, such as Chris Dobson in distribution and Clarke’s long-standing team members.

“We have a real good blend there of fresh eyes and stalwarts of the industry,” he says.

Ageas results on the up

Despite these challenging market conditions, Ageas’s financial results held up well. Its motor combined operating ratio was an impressive 93.4%, compared with 102.6% for 2017. Profits were up from £25m to £77m.

Middle says he relished the challenge of achieving results in a competitive market. “If you don’t love that, if that doesn’t motivate you, then you have a problem because every penny counts.

“The investments that we have made in recent years and the capability we have, particularly our underwriting, pricing and actuarial teams, as well as our claims area, gets stronger and stronger. That stands us in really good stead.”