Aviva reshapes for the future – Bayles

It’s all change at the top of Aviva’s UK general insurance arm, with chief executive Colm Holmes moving to Canada to head up the business there.

But the core of the UKGI senior management team remains intact, including Phil Bayles, who has retained his position as managing director of UK intermediaries, taking on the additional role of leading the trading strategy.

With Holmes’ departure, former claims director Rob Townend has taken on the managing director role, while Patrick Tiernan becomes managing director of global corporate and specialty UK and Europe and Andrew Morrish moves into the role of UKGI claims director.

It’s a case of “round pegs in round holes”, according to Bayles, speaking to Insurance Times about the reshuffle and Aviva UKGI’s strategy for the year ahead.

“If you look at the jobs that everyone’s got, they’re all things that they are best at. So it’s actually quite neat,” Bayles explains, “People who know us as individuals and as an organisation know that it makes sense.”

The intermediaries boss doesn’t seem shaken by the shakeup. Rather, he asserts: “We are doing this from a position of strength.”

Consistency the secret to success

The key, according to Bayles, is consistency.

“We were all heavily involved in running the business anyway and we are just going to be more heavily involved in running the business going forward,” Bayles says.

He continues: “The good news is, it certainly seems to have been received reasonably well by the brokers and our other partners. They know they are going to get consistency from us. They know we are not going to flip flop and to say, well, we’re interested in that now we’re here. The fact is that the existing strategy is working.”

However, consistency won’t stop Aviva from seeking growth.

“Consistency is one thing, but also a desire to keep growing. Brokers want growth. It is the lifeblood of any business. If you can grow any business then that creates extra value, extra profit, ability to invest in new people and technology. We want to grow as a business and that will help our partners as well.”

Will there be acquisitions on the cards?

Acquisitions are not a key priority, Bayles says. He is confident that Aviva’s UKGI unit can build on what it already does to drive organic growth.

He continues: “This is about working the infrastructure and the distribution that we have and the quality of products and our reputation – working it hard, to generate growth, rather than doing something which is perhaps high risk.”

Pressing for reform

Supporting the ABI’s push for reforms in the motor insurance space will be one pressing priority for Bayles and Aviva over the next year.

“We’re very keen to pursue the agenda around motor insurance,” Bayles says. “There are a lot of things around the motor insurance market that aren’t right, that are pushing high costs onto consumers. There’s around 30m people who have to buy motor insurance in the UK, so it’s an extremely important cost for individuals and for businesses.”

Whiplash reform, tackling nuisance calls, pushing for Ogden rate change and remaining vocal about IPT are all high on the agenda.

“If you add those three things together: whiplash, Ogden, IPT, the government has got an opportunity to help with the cost of living and help businesses manage their costs,” says Bayles.

Ominously, he continues: “Or they have the opportunity to make that more difficult.”

Whiplash not a “victimless crime”

On whiplash, Bayles explains: “We’ve been very vocal around whiplash and the need to reform whiplash. We’ve [the UK] got the worst whiplash occurrence in Europe. It’s not because we’re indifferent as human beings. It’s because there is an infrastructure that supports the creation of whiplash claims. I think there are things that the government is aware of, and we can implement, that will clamp down on abuse of the system, and that in turn will feed through.”

Bayles emphasises that, unlike some insurers, Aviva has promised to pass on savings: “We have committed that any savings from that will be directly passed onto the consumer: 100%. It’s about making motor insurance more affordable for customers.”

The insurer boss is keen to stress that whiplash is not a “victimless crime”. Neither, says Bayles, is cold calling, which is a “blight” on society. There are around 6 million nuisance calls and texts made per day, Bayles says. There is a “hidden cost”, says Bayles, suggesting that the real victims are those who are being falsely accused of damaging others, as well as innocent individuals who are struggling with the barrage of cold calls.

Brexit complicating the push for change

Regarding the Ogden discount rate, Bayles welcomes the government’s new line. However, the complexity of legislating for Brexit without a sustained majority makes it difficult for the government to focus on pushing through Ogden reform, he admits.

“All the right noises are being made, but it has to get on the statute book,” Bayles says. “There’s a difference between wanting to do something and actually getting something over the line. Until it happens, I don’t think we’ll rest, or that the ABI will do so. I think the government would be doing something genuinely good for consumers and I think it’s a free win from their perspective. They’ll just take £40 or £50 off everyone’s cost of living and get rid of millions of nuisance calls. I think it’s a win-win.”

Bayles confirms that Aviva will also be fighting to end continued increases in Insurance Premium Tax.

“IPT is a flat rate tax on everyone. It’s not progressive. It’s a regressive tax. People have to buy insurance and they’re being hit with an ever-increasing tax,” says Bayles. “The government didn’t put anything more in the last budget, which I think is some small victory for the industry. But IPT has gone from 6% in 2015 to 12% in 2017, so that affects every business who’s got a car, and every customer who’s got a car or home insurance.”

Digitisation another key priority

Talking about digitisation, another key priority for Aviva over the year ahead, Bayles says: “You never get there. There’s loads and loads of work to be done. As an organisation we’ve come through various mergers over many years. You’ve got lots of legacy systems. But what we are doing is working through that legacy and creating some quite sexy digital front ends. Like MyAviva.”

Aviva is increasingly looking at distribution of data and how it can be used to make things easier for partners and customers.

Direct business may be at the forefront of digitisation, says Bayles, but that doesn’t mean that it can’t also be used across broker channels and Aviva is exploring this. He is impressed by broker appetite for emerging technology.

“Our experience is that brokers are very hungry for technology and digital development. Firstly, they want to be able to compete with the best in the market, and we’ve got the scale to invest in things that enables them to compete. And secondly these guys are entrepreneurs. They want to win,” says Bayles.

He adds: “I think people sometimes mistake the fact that relationships are really important, with not investing in technology when actually the two things go side by side. The more you invest in the right technology, the more time you’ve got to get to know the client, to provide a wider wrapper of service to them

“I think the winners – the best, most progressive brokers, the ones who will grow the most – will be the ones who utilise all the tools that are out there to win. And technology is a key tool these days.”

Providing “reassurance” before insurance

Aviva has invested heavily in technology, and it will continue to aim to keep at the forefront of innovation in 2018, says Bayles. He points to Aviva’s Digital Garage and investment arm Aviva Ventures as keeping them near the top of the insurer pile.

“A key theme for us is trying to build our propositions, which have a degree of prevention built into them, as well as insurance,” explains Bayles.

For example, Aviva are working with HomeServe to install its leak detection product Leakbot in homes. There are further exciting things on the horizon through the partnership with HomeServe; the two have come up with a “peace of mind” package where HomeServe will check a premises’ functionality – the boiler, fire alarms and CO2 alarms, for example – and there will be an insurance package attached to the service in case anything is broken.

Aviva has also invested in smart home detection insurtech start-up Neos.

Talking about Leakbot and smart home devices, Bayles says: “At the moment they are sort of an early adoption piece, but they will become mass market within the next couple of years. We’re looking at similar things for businesses. Risk prevention, for me, is part of the real value add that an insurer and a broker partner can offer to people.”

A brave new world?

“Technology is a huge enabler,” says Bayles.

Insurance has struggled in recent years where it comes to its public image, but Bayles seems optimistic that that can change. Technological evolution, reassurance and prevention could be a big step forwards:

“Insurance is the core, but looking at how we can support people, our mission is to defy uncertainty. Our mission is: How can we help people?

“Life is uncertain, it’s complicated, stuff gets thrown at you. How can we help people to defy that uncertainty in their lives? So, how can we prevent the bad stuff happening? Being there immediately. It’s a very powerful mission to have. It’s asking: how can we help people live their lives, taking away some of that huge complexity and uncertainty that everyone lives in these days? That is our direction of travel. It’s insurance plus. It’s reassurance really rather than insurance.

“We should put equal weight on prevention as putting stuff right. We will always be there putting stuff right. There’s a whole space as an industry that we haven’t chosen to occupy, and maybe the capability hasn’t been there because of the technology element. But technology enables prevention to become a mass market opportunity.”