Step follows complaints from broker members that process was too complex
Aviva is to simplify its profit share arrangements with Broker Independence Group (BIG) members after complaints that the previous contract was too complicated.
Aviva rewrote the agreement after canvassing opinions from BIG brokers. The change will take come into force from March.
Aviva head of broker performance management Clark Ross said the change has simplified how profit shares are worked out but has not changed the amount of money brokers can earn through the deal.
Ross said: “All we’ve done is to simplify the contract and gone for a straight profit share arrangement. It’s just easier to manage for everyone.”
The previous arrangement meant brokers working through a 10-page list of formulae on subjects including classes of business, profitability, growth, claims and expenses ratios.
Ross said the deal would be “in line” with the type of profit share arrangement with the insurer’s other broker club, Club 110.
Club 110 member Ashborne Insurance’s managing director, Peter Smits, said: “A lot of insurers are listening more to brokers about what they want from a club.”
Aviva launched Club 110 in November 2007. BIG was launched in 2009, at a time that former Aviva UK chief executive Igal Mayer tried to reduce commissions with the consolidators and grow premium via independent brokers.
BIG members are independent brokers with accounts of up to £800,000. Club 110 brokers have an Aviva book of £800,000 to £5m. Club 110 has grown to around 170 members while BIG has 150-200 members.
Rather than recruiting new members, Aviva general Insurance UK chief executive David McMillan has told Insurance Times he wants there to be a focus on getting more value out of its current members.
As well as the profit share deals with Aviva and other perks such as discounted training courses, Aviva often launches products and deals in Club 110, then rolls out an adapted version for BIG.
Club 110 brokers get training, marketing and compliance assistance, as well as help from Macquarie Bank for acquisitions. Smits said most brokers value the perks more than the commission deals.
“You can offer me the best commission deal in the world, but if you don’t have the products and services to back it up, it’s never going to go anywhere,” Smits said. “It’s far more important to me to receive quality products and service from our insurer partners.”
Talking points …
● As insurers traditionally assess broker commission deals in the first quarter, what arrangements will the next few months bring for club brokers?
● Broker clubs were once described as re-badged networking conventions - is this still fair, especially as the Bribery Act is likely to stop some of the lavish entertainment previously associated with the clubs?