Aviva are ‘not seeing any indicators to suggest that customers are looking to buy less insurance or cover less,’ says UK chief executive
While the “value of insurance is undimmed”, Aviva UK’s chief executive for general insurance Adam Winslow said he believes that the sector is currently undergoing “a period of realism”.
The comments followed the release of the insurance giant’s half year results for 2023 earlier this week (16 August 2023), in which it posted a gross written premium result of £5.3bn, representing a 12% increase year-on-year from its H1 2022 financial results.
Aviva also saw its operating profit rise 8% year-on-year for H1 2023 to reach a figure of £715m – up from last year’s H1 figure of £661m.
Despite the strong growth and strong financial performance, Winslow told Insurance Times that Aviva and the wider insurance market were operating in an environment defined by “persistent inflation”.
“The impact of inflation on pricing is an insurance and macroeconomic story, so that’s not Aviva specific,” he explained.
“We’ve pushed about 27 points of rate on motor and 24 on home through the first six months of this year. I don’t see inflation weakening or abating anytime soon.”
The impact of inflation has somewhat dampened optimism around the sector, said Winslow, but he noted that Aviva were ”not seeing any indicators to suggest that customers are looking to buy less insurance or cover less”.
Winslow added: “In these times, the two effects you do sometimes see from a customer perspective are increased fraud risk in personal lines and the risk of underinsurance in commercial lines.
“However, the vast majority of customers are realistic when they buy insurance and know the value and purpose that it serves.”
Much of Aviva’s strong performance despite tough economic conditions can be attributed to its strategy to diversify the business and reduce exposure to any one market struggling.
In a statement on the firm’s results, Aviva’s group chief executive Amanda Blanc said: ”Our excellent trading momentum is a direct result of the decisions we have taken over ther last three years to refocus Aviva. Today, Aviva had leading positions in growing markets, providing strong resilience in the current economic climate.”
Winslow added: ”Roughly 50% of our business is personal lines and 50% is commercial lines, so we’ve got a hedge working across the market. Within commercial lines we are big writers of property and casualty, but we also have fleet, financial lines and have grown in the renewables market and the cyber space.
”We’ve also grown our multinational insurance portfolio to diversify outside of purely UK rsisk, with a combination of all of that meaning we have more eggs in more baskets.
“The value of that diversification is that we’re not in one line in one class in one distribution channel in one part of the market, because if anything happened to that then we’d see 100% of the impacts – in our position, the value of diversification means that our position is sometimes countercyclical, if something impacts cyber for example, then it probably doesn’t impact on motor.”
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