Commission bonus to brokers helps net written premiums lift 4% for UK’s largest insurer
The first-quarter results for 2010 showed a slow but steady return to form for the UK’s largest insurer, Aviva. Under the fresh management of Mark Hodges and David McMillan, the insurer is attempting to reverse Igal Mayer’s ‘scorched earth’ policy that saw £1.1bn wiped off its commercial premiums over 2009.
Having since accepted that rates are not turning in the way it anticipated – and that burning its bridges with the largest brokers is too risky even for a company with its clout – Aviva has become markedly more flexible, resulting in a modest but welcome 4% rise in net written premium to £913m for the first quarter of the year.
This has been achieved through a mix of existing business winning new accounts. The new business drive has no doubt been helped by a 2% commission bonus for brokers bringing new customers through the door – an initiative that demonstrates the shifting power balance between insurers and brokers.
RSA also had a healthy first quarter, with net written premium up 7% to £697m. The insurer said its growth was thanks to rate rises and expansion in areas such as broker personal lines and affinity. RSA has steered a steadier ship this past year or two than Aviva, with strong relationships with the big brokers and a targeted approach to rate rises.
Out of the major composites, AXA came off worse with a rise of just 1.4% in its UK general insurance business to £982m. The French insurer said it had pushed up rates by 2%, but these were offset by lower volumes in commercial lines. Like Aviva, it has been offering a commission bonus to brokers bringing in new business.
Rates have room to rise
The insurers are united in their complaint that rates have not risen further enough.
RSA takes a fairly bullish line, claiming that the average rise across its commercial book was 7%. Still wounded from last year’s vain bid to turn the market, Aviva is less outspoken on rates, with McMillan saying simply that it will look at business case-by-case and reiterating that it no longer feels a duty to lead the market.
But there has been one glimmer of hope. The private motor market at long last shows certain signs of hardening – though given the level of reserve releases over the past couple of years, there were few other options.
Indeed, this market has bought some joy even to AXA, where motor revenues were up 31% in the first quarter, helped by double-digit rate increases and higher volumes from Swiftcover and AXA Direct. Of course, how much these gains across the market are swallowed up at the end of the year by rising claims costs remains to be seen.
• First-quarter results this year reveal a slow return to form for some of the major insurers
• Aviva and RSA had a good Q1; AXA?had mixed results
• Rates have risen in some lines, but not enough, say the insurers
• Private motor has shown some hardening, but how much impact this will have on the wider market is unclear