Insurers say they doubt whether brokers would want to purchase personal lines products through an e-trade platform
Major insurers have vowed to stand firm in their e-trade offering in response to Aviva’s radical moves in the market.
Aviva has started offering personal lines products and commercial van insurance at a cheaper rate through its Fast Trade e-trading platform than is available through software houses.
The move could present Aviva with a competitive advantage, but rival insurers have shown no sign of following suit.
“We’re not sitting here saying we are going to do something which suggests we support one channel more than the other,” explained AXA’s director of commercial intermediary trading Deepak Soni as to why the company had not followed Aviva’s lead.
“I wasn’t surprised at Aviva’s decision. If you are looking at a marketplace and looking at how you can be more competitive, then one of the ways is to look at where certain costs emanate from.
“What Aviva has done is effectively look at that and made a conscious decision to do something different.
“The difference for us is we are not in a position today where we are not competitive.
“People aren’t saying to us we’re not competitive and people aren’t saying to us that they want a single solution which bypasses the way that we currently trade today.
“From our perspective we support the broker market. Brokers want to trade either directly via the extranet or they choose to trade via software houses and today we support both avenues equally.”
Mixed blessing
Brokers have already described Aviva’s move as a “mixed blessing” – they are pleased about cheaper rates, but would be happier if available through software houses.
Allianz is currently in the process of transferring large parts of its personal lines products to LV=, but digital trading manager Julie Tongue said Allianz would also support both avenues of doing business with brokers.
She said: “Allianz is committed to offering the same price for commercial lines digitally traded business, whichever distribution route the broker chooses.
“Therefore brokers will not see a differentiation in price if they choose to do business with Allianz via a software house or via QuoteSME.”
Aviva’s Phil Bayles has argued that by rolling out personal lines products and commercial van insurance on Fast Trade it will allow brokers to better compete with direct models by getting the very cheapest offer available.
But while insurer extranets have proved a competitive alternative to software houses in commercial lines, RSA’s e-channel manager for commercial risk solutions Ryan Bendelow questioned whether personal lines products would suit e-trading so well.
He said: “It was interesting to read about Aviva’s decision to offer its personal lines and commercial vehicle products via its own extranet, Fast Trade.
“Our longstanding view of the broker PL and CV market is that brokers are looking for the most efficient way of trading this low premium, high volume business as well as having access to a wide range of markets to give their customers’ choice.
“By removing the associated software house costs, Aviva is able to offer preferential rates to brokers using Fast Trade.
“However, it remains to be seen if this alone will be convincing enough for brokers to rekey data onto Fast Trade – effectively doubling their work to obtain one extra quote.
“Whilst the adoption of software house integrated e-trading for commercial products is still being challenged by the continued success of insurer extranets, the EDI (electronic data interchange) model for personal lines and commercial vehicle is a mature one. Will brokers really be prepared to move away from this established way of trading?”
Software houses
Nick Giddings, chief marketing officer at Open GI recently told Insurance Times that software houses would survive the threat posed by Aviva’s move. And while other insurers are continuing to back both distribution routes, brokers are likely to continue using software houses to find personal lines products.
What might change things is if another insurer were to break ranks and join Aviva in its undercutting of the software houses.
On this possibility, Soni added: “If we as AXA wanted to change the way we approach the market we’d do what we feel is right for brokers, which doesn’t always necessarily mean it’s right for every other insurer.
“So, if lots of other insurers followed suit then we’d certainly look at it, but that doesn’t necessarily mean it would be a route we would follow.
“It would depend on how it affects the market and if it’s what our brokers want.
“Because fundamentally the way we trade is designed to make it simple for them and us to trade together.
“Doing something that is counterproductive to that isn’t going to help either party, so it’s got to be driven by brokers as much as it’s driven by us.”
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