Aviva’s Winslow insists ‘we can do more’ to return broker service to pre-2019 levels

As previously reported by Insurance Age insurers have been burdened with extra claims costs in 2022 due to weather-related events. The most notable was Direct Line’s shock profit warning as it was hit with £90m worth of claims whilst Allianz’s drop in operating profit was not helped by its own £32m winter bill and Ageas estimated the December freeze cost it It €23m in the UK.

In January Aviva reported that weather-related events could cost the insurer around £50m, and today it reported another slip in its combined operating ratio (2022: 96.1%) and a 5% drop in its operating profit as it revealed its full year results.

Following the publication of its latest figures Aviva stated it continues to maintain pricing discipline in order to offset claims costs, which inevitably means rising rates.

This will have a knock-on effect on brokers as they have to pass on these rates to their customers.

Commenting on how it planned to help brokers, Winslow, pictured, said: “So it’s not just about building solutions or building expertise within our business, it’s also about Aviva working to support brokers with expertise in the evolving market across a number of themes such as cyber, renewables and sustainability, so that they are really comfortable having the right conversation with an end client about the full dynamics of their worries in the risk environment.”

Broker feedback

He added that he speaks with brokers every week and feedback has been positive.

“Brokers acknowledge that service in the marker overall, not specific to Aviva, has not got back to pre-2019 levels yet. The important thing from an Aviva perspective is that we listen and we act on that feedback,” Winslow commented.

“A good example is that a broker mentioned another insurer had a claims portal and why can’t they see their claims digitally through us. So we delivered the claims portal which takes away cost and time for the broker and we will continue to focus on digitalisation.”

On the regional side, Winslow detailed the insurer is putting more people into local offices.

He stated: “We have got around 500 underwriters today out in the region, which is a considerable number to start with. We make sure they have the right licenses and permissions to trade effectively, that they are visible to the brokers and that they are giving good service and acting quickly on new business and renewals.”

Weather and inflation

Referencing the 1.5 percentage points rise in its COR compared to the previous year Jane Poole, CFO of Aviva UK & Ireland general insurance, pointed to weather-related factors and the impact of inflation: “Whilst we have responded quickly and priced ahead of inflation, it will take a full year for all of the earned benefit to come through. The full earned impact of our pricing actions will come through in 2023. We also had a greater claims frequency in 2022 compared to 2021.”

Both Poole and Winslow said that the provider has the ambition to reach 94% COR. 

Winslow added: “We are really conscious that this could be another difficult year. It is hard to be sitting here in March and be knowledgeable about what may or may not happen. With inflation some things have gone down and some things have stayed the same, but [pricing] hasn’t been abated by the impact of the reinsurance renewals.

“Our challenges as a team is to price appropriately, to have the right solutions through the right channels, working with our broker partners, particularly in high net worth and commercial lines and to deliver the best possible outcomes for our clients.”

On a more positive note, Aviva’s gross written premiums continues to rise with a growth of 8% in 2022. Winslow stated that this was due to multiple reasons, one being inorganic growth.

“We didn’t have the right skills and capabilities to underwrite or scale the [high net worth] business. So, acquiring Axa XL and the Azur businesses, putting together an adequate team has given us the opportunity to become number one in the market and to continue to write more business,” Winslow said.

“A lot of that business comes from the same brokers we work with on the commercial lines; meanwhile a lot of SME company owners are high net work individuals, so that is another area we can grow in our personal lines business.”

In addition, he detailed how Aviva had got a more focused set of brand [partners] with a focused set of end targets from a retail and a direct channel perspective.

Pricing appropriately

As the insurer tackles the burden of claims costs by pricing appropriately, personal lines customers also face cost-of-living challenges, which Aviva is mindful of.

Poole concluded: “It’s about getting that balance between competitive prices and looking after our customers. On the pricing side, if we look at personal lines, we saw 9% to 11% inflation and we did increase our prices to cover for that. But then equally, we expanded the product set we’re offering. We launched QuoteMeHappy Essentials which is a lower cost car insurance product, which is still comprehensive, but for price sensitive customers.

“It’s about trying to adapt our offering to still meet the wide range of customer needs that we get during these times.”

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