Aviva extends commission incentive, but sticks to strategy

Aviva will not make sweeping changes to its commission structure in 2010, despite its latest incentive for brokers.

The insurer is offering brokers a 2% commission increase on commercial business if they meet targets on new business placed with it in the first quarter of the year.

Intermediary and partnerships director Janice Deakin told Insurance Times that the reward paid to brokers would allow the insurer to win “good-quality new business” but denied that the insurer planned to revert to a system of inflated commissions, insisting there was “no blanket change”.

“We have no plans to go back on the commission changes we did last year because what we did was target where we needed to make changes, as the business was not profitable enough to support the commission it was earning,” she said.

“If you do the maths on new business, it does not equate to great big commission increases. We will not be expecting our commissions to go up at all this year. In fact, if anything, I expect a lot of what we did last year to keep earning through and then come slightly down. This is just about having the right flexibility and not being hard and fast on anything.”

Deakin, who has been handed overall control for negotiating on commissions with brokers by Aviva’s new UK general insurance chief executive David McMillan – as reported by Insurance Times last week – said the insurer would continue to offer brokers commission rewards that are “specifically targeted to incentivise the right behaviour”, such as the 2% deal running at the moment, which was extended from the previous period.

“It’s not part of any big strategy change,” Deakin added. “We will have different sales incentives and targets running for every quarter. It may be different in quarter two; we are just looking at what that could be.”

She also stated that the insurer would not sacrifice underwriting discipline to grow its top line.

“[Underwriting discipline] can’t be any more important. With the right sort of incentives on new business, it can actually drive the quality of the business you get. We have got measured growth plans in the broker market this year … We don’t expect the market to get any easier.”