Chief executive acts to stop commercial motor price war

AXA has admitted that it has a problem with its direct business poaching customers from its broker channel.

The admission comes in response to claims that AXA Direct is undercutting premiums, particularly in the commercial motor sector

But chief executive Peter Hubbard said that the company was working hard to prevent such conflicts.

Hubbard said: "We recognised 18 months ago that having two completely independent channels in the marketplace could lead to channel competition. But 85%-90% of our business is in the intermediary market, so we are very aware of potential channel conflict."

He said that, previously, AXA's intermediary and direct arms had used different rating engines, but in order to prevent such conflict, AXA converted both to use the same rating engines in late 2002, across all product lines.

"If you have two rating engines you will automatically get channel conflict, potentially," Hubbard said.

Since that time, he said that AXA has worked to improve business practices in each area to prevent channel conflict. "We built a database of cases so that if AXA Direct commercial gets a case quoted and it has one of our brokers' names associated with it, then it is not allowed to quote for it. Have there been some cases where that's not always worked? The answer is yes, but bearing in mind that we have something like 500,000 policyholders, the number of cases is very small."

Hubbard said that in order to continue to lessen the potential for competition between its direct and intermediary arms, AXA was currently working to "completely re-beef up the protocols".