Banking on UK insurance

Althouygh banking giant National Australia Bank Group was making headlines this month with rumours about a possible take-over of Alliance & Leicester, staff within the group's UK insurance division were marking another occurrence - a new name.

From this month the three insurance subsidiaries within the UK - Clydesdale Bank Insurance Brokers, Yorkshire Bank Financial Services and Northern Bank Insurance Services in Northern Ireland, will be transferred into a single insurance intermediary company, National Australia Insurance Services (NAIS).

And the group plans to keep the regional face of the insurance divisions by maintaining the use of the three trading names, the combination creates a turnover of £61m (based on 2000 figures), which now makes it the fifteenth largest insurance intermediary in the UK according to the Insurance Times Top 50 UK Insurance Brokers and Intermediaries 2001 list.

This puts the brokerage above banking intermediary rivals such as Woolwich Insurance Services - sixteenth with a turnover of £49.7m and Barclays Insurance Services - nineteenth with turnover of £42m.

Harnessing potential
The name change is just one in a number of developments the division has taken in the past 12 months in an attempt to drive forward the general insurance activities of its three regional banks - Clydesdale, Yorkshire and Northern Bank.

Head of insurance Norrie Erwin says: "There is significant change going on within the insurance business, which falls within the group's European wealth management division. We are an insurance business whose distribution almost exclusively relies on our banking partners, but our strength lies in the fact that we can deliver total solutions for our clients, which includes banking and insurance."

He adds that now the direction of the insurance business will be to approach it as one national enterprise, but with very strong regional representation.

"There is scope for this, because we are finding that each bank, for example Northern Bank in Northern Ireland, will be supported by people in that region, but as they gravitate into other parts of the country the relationship tends to stay. Also there are parts of the country into which the group is looking to extend its reach.

"From an insurance perspective, I think that is a very positive combination of competencies. It is what every intermediary wants to achieve so we really want to harness that potential. Sometimes when you have these things you don't actually recognise you are already there and some of your competition are aspiring to be there. So one of our main objectives now is to leverage the national presence, but also remain regionally focused."

NAIS is split into two segments, personal lines, which is based in Belfast, and commercial lines, based in Glasgow. Last year it remodelled the commercial lines segment to better reflect the insurance needs of its banking customers. It now aims build a similar platform for its personal lines division.

The reshaping project aims to reflect
the key segments of the group's banking financial services, which are micro, package, custom, agricultural and corporate.

Erwin believes this creates significant growth potential. "To do this, it is really important to have in-depth partnerships with a few select providers. This is not necessarily a strategy we have adopted before, but we feel it is appropriate going ahead."

Reduce suppliers
The core panel consists of Allianz Cornhill, AXA, Norwich Union (NU), Royal & SunAlliance, Zurich and access to the Lloyd's Market through JLT.

The division has dealt with more than 100 insurers in the past and the aim is to produce faster, more focused quotes and better service standards.

Erwin says that placing a larger volume of business with a reduced number of suppliers strengthens the company's position to negotiate more competitive deals. He also feels that increased levels of business placed with chosen suppliers will allow NAIS to carry more weight when agreeing quality standards and service for customers.

Erwin adds: "Each supplier will bring its own competencies, but are united with the aim of satisfying customers in what is a difficult and challenging marketplace.

"The panel were chosen because most of them are represented on a worldwide basis and it enables us to get synergies from our other businesses worldwide, such as Australia."

In December, the company also established an agreement with NU to handle all its new micro insurance business, which is commercial policies below a premium value of £1,500. NU was already the chosen supplier for 50% of the micro business before this.

"The micro business is high volume in terms of numbers, but in premium income it can relatively small," says Erwin. "Therefore this outsourcing agreement frees up resources, allowing us to nurture new customers."

Growth aims
This year, a similar reshaping project is set to commence in its personal lines segment, which is made up of creditor and payment protection, home, motor, travel and a developing personal accident telemarketing division.

"Payment protection is the biggest area of our personal lines business," says Erwin. "This is because it is embedded into the sales process when people take on mortgages, personal loans and credit cards. It is a product and service that has been focused on in the past four to five years and it is an intrinsic part of the business.

"The aim now is to try and grow the other aspects of the personal lines division. We want customers to start seeing us as an insurance company within a bank." n

National Australia Bank
Asset base of more than £90bn

More than £144bn of assets under administration

Almost 12 million customers

Operates on four continents in 15 countries

In the the world's top 50 largest banks

Owns the UK's Clydesdale,Yorkshire and Northern banks