Insurer says it welcomes discussion with brokers on personal lines
Brokers have been told they will need to play with a “straight bat” if they enter into a profit-sharing arrangement with Aviva on personal lines.
Aviva head of broker personal lines Sam Hudson said the insurer would consider profit sharing and wanted a discussion with brokers, although there were no current plans to roll anything out. He was speaking at Insurance Times’s broker clinic on personal lines in London last week.
Hudson did not flesh out the details, but one way to secure an arrangement would be for Aviva to set targets on key performance indicators, such as loss ratios, and then reward brokers on a profitable book.
“The advantage of a profit share is that it gives both parties an interest in sustainability of the book,” Hudson said.
“People have shied away from it traditionally as there was quite a long tail on private motor business because of some of the bodily injury. So it’s quite difficult to know how some of the claims will work through over a period of time,” he added.
Biba head of technical services Peter Staddon said that, in the past, he had heard of brokers delaying putting through claims, because it might ruin their results for a certain period and then erode the rewards from a profit-sharing arrangement. “By and large, it should not be a problem,” Staddon said. “Brokers will have to make sure they are playing with a straight bat, and to be fair most will be doing that.”
Personal lines broker Allen & Allen’s founder, Tony Allen, said: “I think it’s a great idea. It’s always difficult in motor, because with all the reserving it can sometimes be very challenging with the figures. It’s possible to do and it’s nice to think that we can work together with insurers and add value.”
We say ... Profit sharing
- Brokers will have to work harder to produce more profitable books, but profit sharing is a good idea and a debate will be welcomed by brokers.
- Aviva is proving to be a real friend to the personal lines broker. Last year, it rolled out Personal Best, which offers brokers similar deals to its direct arm, to help keep them competitive.
- With rates rising by at least 20% this year in motor, it is a good time to discuss profit sharing.
- After a tough two years for brokers, Zurich is now keen to push back into broker motor, Provident's future is secured following a takeover by Covea, and new players such as Liberty and Canopius are keeping capacity flowing.