Insurance giant continues its squeeze on commissions by taking tough stance with consolidators and alliances.
Norwich Union (NU) has said it would rather deal with brokers directly than through networks or alliances, in its latest hardline stance on distribution.
George Berrie, NU’s director of trading, emphasised that the UK’s largest insurer would continue to work with networks and alliances, but insisted there must be a commercial advantage in doing so.
The development comes as the insurer continues its tough negotiations with consolidators to push down commission levels. Both moves reflect its strategy to cut its distribution costs and work closely with small and medium-sized independent brokers, through its Club 110, which offers support for brokers.
Berrie confirmed that NU would be holding talks with certain networks and alliances in the coming weeks. He added: “If a network delivers natural value for its members and for Norwich Union then fine. We are definitely not walking away from that. We have got fantastic relationships with some of the networks and alliances.”
“If a network delivers natural value for its members and for
NU then fine. We are definitely not walking away from that.George Berrie, Norwich Union
NU has already met Grant Ellis, chief executive of the UK’s largest network, Towergate-owned Broker Network. Ellis said: “There is a review happening on an organisation by organisation basis, [Norwich Union] was underlining that strategy. I am delighted to say that Broker Network forms part of it.
“As I understand, there are some organisations it feels it can work with, and some that offer a lot of rhetoric but do not deliver.”
A senior broker suggested the benefits offered by Club 110 outweighed those offered by alliances.
The source said: “There’s definitely a move to reduce the commissions in this soft market, and insurers are beginning to look at alliances and ask whether they should withdraw the deals they offer them.”
Insurer launches price checker as alternative to aggregators
Norwich Union has ditched aggregators as a distribution route for its direct business. The move comes as the insurer launched a service enabling customers to compare the products and prices of its rivals.
Customers seeking a motor quote online or over the telephone will be able to check the insurers motor policy and price against its competitors. They will also be offered the chance to check policy cover and feature details with more than 140 insurance providers in the market. The insurer claimed it would show rivals cheaper quotes.
The move away from aggregators comes at time when Norwich Union is looking at its distribution costs across its general insurance business. This has led to the insurer taking a stand against the high commissions demanded by consolidators.
An NU spokesman was unable to comment on whether the cost of using aggregators was a factor in the companys decision. The spokesman said: Aggregators were good for us. This is about a direct provider being a direct provider.
Norwich Union said the new price checkers would give customers the chance to compare their quote in context with other insurance providers in the market without the hassle of shopping around.
David Tyers, director of marketing at Norwich Union, said: By showing them our competitors prices, regardless of whether we are the cheapest or not, we are giving them the chance to make an objective decision about what they are buying.
Peter Ablett, commercial director of aggregator Confused, said: Norwich Union may be offering competitive quotes and service to consumers but, by removing itself from comparison sites, it is limiting the consumers ability to see for themselves.
