Aviva’s ‘simple and nimble’ approach helped COR performance

Aviva has said operating in a “simpler and more nimble” way helped its combined operating ratio (COR) performance in 2022.

The insurer’s full year results for 2022 – published yesterday (9 March 2023) – revealed its UK general insurance (GI) COR was 96.1%, only 1.5 percentage points higher than 2021’s figure.

The slight rise was mainly driven by a COR increase in its UK GI personal lines division, which rose from 94.6% in 2021 to 97.3% in 2022.

But GI commercial lines COR remained largely static, only increasing 0.3 percentage points year-on-year.

Jane Poole, chief financial officer of general insurance in the UK and Ireland, said the business spotted personal lines inflation early in the second half of 2021 – she claimed the company “responded quickly with pricing” with the help of its modelling tool.

She added that Aviva was “working hard on its efficiency”, highlighting that the company’s expense ratio had gone down.

In its most recent results, Aviva posted a UK GI expense ratio of 11% across 2022 – this was one percentage point better than in 2021, when the figure stood at 12%.

“It’s actually 9% better than it was in 2018,” Poole said.

“[That was the result of] a whole suite of actions we’ve been investing in – [including] automation, digitising our customer journeys and reducing the amount of products that we’ve got.

“We’re just getting simpler and more nimble as a business.

“There’s a lot in that, but it did take many things to try and stay ahead this year.”

Costs down?

Poole also pointed out that within Aviva’s claims base, the insurer used the “advantages” of its operating model “to try and keep those costs of claims down”.

Highlighting motor claims, she said: “About 80% of our motor claims go through our repair network.”

Aviva benefits from lower claims costs through its wholly-owned repair network – Solus Accident Repairs.

“That allows us to keep hire durations lower, which helps get our customers back on the road quicker,” she explained.

“It also supresses the cost of inflation and we’re working hard to keep those costs low for our customers as well.”

Meanwhile, Aviva UK and Ireland general insurance chief executive Adam Winslow pointed to its Quotemehappy.com Essentials tool as a way of driving costs down for customers.

Announced in October 2022, the platform provides comprehensive car insurance without some cover elements, such as personal belongings, European cover and windscreen or glass only claims.

“You’ve still got a comprehensive motor cover, but you’re paying less for it, deliberately for those customers who are price sensitive thanks to the cost of living challenge,” Winslow said.

“That would be a good example of where we’re trying to keep our costs as low as we possibly can.”

Winslow added that Aviva would look at improving its personal and commercial lines by “focusing on growing its retail business”.

“So, it’s the face of the price comparison website and direct business,” he said.

“There, it’s really around the brand segmentation and ensuring that, fundamentally, we have the right solutions targeted at the right customers through the right channels and priced appropriately.”