Extra commission offered in fight for new business
Leading insurers including AXA and NIG are offering extra commission to brokers as they fight for new business, following Aviva’s lead.
The deals on the table signal insurers’ determination to protect their market share in the face of aggressive competition for new business and a squeeze on clients’ spend.
AXA, for example, is offering 2% extra commission on any new business premiums between £5,000 and £250,000 that brokers bring in before 30 June.
NIG is offering a 3% uplift on business transacted on its NIG Network in March and April, ahead of a relaunch of the trading portal.
In February, Insurance Times reported that Aviva had offered brokers 2% extra if they hit their new business targets in the first quarter. This week, Aviva confirmed it had extended the deal into the second quarter.
AXA’s distribution director, commercial lines intermediary, Keith Hector said: “It’s a drive to increase the submission levels we have and work closely with brokers to convert the kind of enquiries we feel we’re good at.”
Asked if the new policy was a direct response to Aviva, he said: “Other companies have deployed comparable initiatives, so we’re making sure we’re on a par with that, but there are a lot of other strands to this.
“We have reviewed all elements of our trading; it’s not a direct response to that. It’s part of an initiative called ‘Fighting Fit’, where we’re demonstrating to our brokers that we are trading hard in a challenging market.”
Other elements to the Fighting Fit initiative include a trading guide outline of AXA’s risk appetite to brokers, and more decision-making power for underwriters, he said.
NIG is also offering extra commissions to brokers as it embarks on an aggressive growth strategy following a management overhaul at the end of last year.
A spokesman said: “The offer was open to brokers that supported NIG Network during that period for ‘package business’, in other words, using NIG Network – the firm’s extranet online facility – for smaller commercial lines business.
“An additional 3% uplift in commission has been available during this time. It is simply a tactical incentive ahead of the full relaunch of NIG Network later this year.”
One leading broker questioned the insurers’ strategies, however. “They’re moving from chasing profit to volume – but nothing’s changed,” he said. “The rates are still too low, and they still need to look at their loss ratios. Because of pressure from their shareholders, none of them seem able to take a longer term view.”