In the second part of this online exclusive, the Aviva UK general insurance CEO talks openly about broker relationships, commissions and football
Will you and Aviva UK CEO Mark Hodges negotiate with brokers face-to-face?
The principal person that will negotiate on deals and commissions and things like that is Janice Deakin. Janice leads the broker market place so I don’t imagine that I will be sitting across from people negotiating commissions unless it’s really essential. I certainly don’t imagine that Mark (Hodges) will be doing that. Janice does the vast majority of the negotiating and deal hunting at the moment and has done over the last couple of years. What we have done with the structure is we have taken the broker and partnership role that Janice had and put it on to the exec to recognise its importance. So she is sitting on the executive where as she wasn’t before.
So what will be your main focus?
I’ll be focusing on leading the business, focusing on developing strategy and performance of the business, relationships and talent in the business. I’m sure I’ll get pulled in to individual deals occasionally but that’s not the main purpose of the role. Janice is a top class relationship builder, trader, negotiator, and that’s what she’s paid to do. I don’t think Mark and I would be doing our job properly if we were spending our time horse trading on commission levels.
The thorny issue of broker commissions has been well documented, what’s your stance on this?
As I said earlier, I think relationships are important, understanding broker’s business. With a hard commercial hat on we do not want to be in a position of writing gravity defying deals. So that means being disciplined about paying the right levels of commission in relation to what the underlying loss ratio of the business is. And that’s what good responsible insurers should do. So we’ll look at each deal and transaction on its own merits.
So is the door now open to all brokers?
We’ve got existing relationships right across the market, with consolidators, regional brokers, nationals and small independents and we will continue to be a broad church for the market. It’s a small enough, competitive market without boxing yourself off and saying certain part of the market is off limits. You would be foolish in a market that is not growing much to lock yourself out of different parts of the market.
Are you working on fixing any relationships?
There will be relationships that will see a change of management as an opportunity to build bridges and I think that’s a good thing. But at the end of the day we will look at everything on its commercial merits. There might be a change in tone but there is no real change in stance. We are not going to do stuff that destroys value for our shareholders. We are open for business but with a commercial edge to it.
Can you guarantee brokers that Aviva is committed to broker market for the long term?
I would be absolutely mad to say no to that. We are the largest player in the SME part of the broker market. It has been historically one of the most consistent parts of our business. We’ve got about a 20% market share so we’re pretty much committed for the long run. It is the most important part of our business. I can't envisage a world where we aren't a strong player in it.
How important are the Broker Independence Group and Club 110 to this?
Massive, we get such good feedback from brokers on BIG and Club 110. I’m starting to get my head round on how we can build on that. With Club 110, rather than expanding it, I’d like to put more focus on how we drive more value for us and the broker out of it.
How will you grow Aviva’s top line and increase your premium income?
You need to look at the places where we don’t punch out weight at the moment. If you look at corporate risks depending on who you listen to that might be anything from an £8bn to £9bn market in the UK and we have got a very small market share. We are probably 16th or 17th player in the market so clearly that is an area - providing we can build capability at the right speed - where there is an opportunity to really grow the top line and give some of our competitors a run for their money. We’ve had a fantastic response from the likes of Marsh, Lockton and Willis. There is a massive desire for the broker market to have a blue chip player like Aviva operating in this space.
How about personal lines?
In broker personal lines we’ve historically been strong but have left it quite fallow over the last three or four years, we are keen to grow that back up again and there is a lot of room for growth for us in that market.
If you look at the core SME heartland, there will probably be less top line growth in there because we are already really strong. We have got to continue to innovate and be responsive to our brokers and continue to look for a new edge. If you look at it top down we are relatively strong there so the opportunity to grow there is not at strong.
How are you preparing for John Kitson’s departure?
John has mainly stepped out of the mainline of the business since Christmas. Janice has been pretty much running the show. He’s been working on a couple of projects for the UK executive. His role was sales and marketing director which we’ve effectively split in to two. Janice is leading all broker and partner relationships and we’ve currently got a search in the market for a retail director, which we hope to appoint soon.
Finally, which team do you follow?
My home team is Arbroath. But in Scotland I also follow Celtic. I quite like Man Utd down here, purely because of the quality of football. I follow Scotland in everything from Rugby, Football to Tiddlywinks.
What about the Canaries?
I’ve been to see Norwich City a couple of times, many of my colleague including Mr Kitson are mad Norwich fans. My son is also a Norwich City fan.
David McMillan was speaking to Insurance Times digital news editor Danny Walkinshaw.