Tough talks on rates and commissions took premium down too far, say market sources
Aviva is rebuilding its relationships with some of the major consolidators as it seeks to boost its accounts with them.
The UK’s largest insurer is now working more closely with some of the biggest brokers, such as Towergate and Jelf, after a round of tough negotiations over rates and commissions reduced its business with them significantly.
Aviva’s corporate sales director, Janice Deakin, said the insurer was “always looking for new opportunities”. She added: “We have drawn a line under some of the tough negotiations we had and are getting on with business as usual.”
Insurance Times understands that Aviva has not offered to raise commissions, but that it is looking at underwriting new areas of the consolidators’ books. It is not thought to be growing its accounts with all the consolidators – Giles, for example, is expected to remain a relatively small account.
Market sources speculated that Aviva’s account with Towergate, the biggest consolidator, had dropped from about £400m, including Paymentshield, to £250m, and that it was seeking to move it back towards previous levels.
One senior source said: “When Aviva publishes its half-year results [in August] they are going to show how much its premium has reduced year on year, and that’s going to be embarrassing.
It needs to be able to show how it’s building it back – that’s why it’s scrambling now.”
Another source said: “Aviva suffered badly through the aggressive stance it took on rates and on commissions. There’s a love-in going on at the moment as it tries to get its relationships back on the right footing.”
Deakin denied that Aviva’s relationships with the consolidators was influenced by its premium levels, but said that she could not comment on the forthcoming results, or on individual relationships.
Aviva, formerly Norwich Union, will report its half-year results on 6 August. In 2008, its general insurance GWP was £11,137m, up from £10,569m the previous year.
In recent months, it has made concerted efforts to get close to smaller brokers, with the expansion of Club 110 and the launch of the Broker Independence Group.
Last week, it took 80 of its brokers on a Mediterranean cruise. A spokesman said: “Brokers are a vital part of our business. They represent one of the key distribution strategies for Aviva, and the broker channel in UK GI is our strategic route to market for all commercial business.
“This is a once-a-year business conference, a critical business event that brings all our largest brokers together. We share our business strategy and plans and engage our key broker partners in our future vision.
“Listening to our brokers has never been more important to Aviva and this engagement and support is critical to the UK GI business. This business event is a key part of our engagement.”