Virgin on success

Victory for Mark Hodgkinson is an absolute. The managing director of Virgin Money is using the biggest names in the business as his yardstick for success in the general insurance industry.

In less than five years his aim is to be challenging the likes of Norwich Union Direct, Churchill and More Th>n to be the biggest and best in the market.

He says: "We absolutely have real ambitions to be at the top of the tree in terms of the other big players - in five years or less.

"Where we see opportunity is in the financial old guard, the big traditional insurers where customers are being charged higher premiums than they need to be."

If the statement is bold, it is matched by what we have seen so far of Virgin's attitude.

The company came on to the market in May, taking a swipe at both the pricing and lack of clarity within the general insurance industry. Whether it is substance or spin, Virgin Money claims to be able to cut up to 40% off home premiums and 48% off motor - all this and with the chance for customers to pay monthly without incurring any additional costs.

The logical reaction to a 0% APR offer on monthly payments is that the cost must be hidden in the annual fee. Hodgkinson has a different idea.

He says: "We have made a judgment that we can afford to give that margin away on the basis that because it is a stronger proposition we will derive a greater scale proposition."

He argues that convenience is a strong selling point: "One of the reasons we did it was that in our research 60% of people said they elected to pay for their premiums monthly and in many cases they weren't really aware of how much they were being charged.

"So generally you are just trying to give customers a really strong assurance.

You have a product you don't have to worry about and it will take care of all your needs."

This seems to be the Virgin Money mantra: price and convenience. As with all brandassurers, Hodgkinson stresses the importance of protecting the Virgin name by backing it up with real substance.

Working with UKI, which also underwrites the Tesco insurance products, Virgin Money could well be among the sharpest operators on price. Convenience, in an industry not famed for its customer service, could be more difficult.

Hodgkinson is understandably reticent about his plans for the future, but one possibility that could feature strongly is the idea of an integrated insurance offering. This might utilise a single rolling policy, including any number of separate schemes with one price, one renewal date and one certificate. The idea is not new, but it has yet to be successfully introduced on a large scale.

Hodgkinson says: "First we have to consolidate the plans we have for motor, home, travel and pet. Then we have plans to bring those together into an integrated proposition, so that it is convenient for our customers to take on board.

"What is important for us is to make it as easy as possible for a customer to deal with us and to cover as many of their insurance needs as they require. Whatever it takes to deliver that is what we will be doing. It is possible that we will go for one policy document and one renewal date."

However ambitious the plans for the future are, their implementation will depend on the groundwork that went into developing the business model and the level of success at marketing it.

Unsurprisingly, the start of Virgin Money's preparation for a general insurance launch coincided with Hodgkinson's appointment as managing director in May 2003.

His background is project management and business development. Time at Guardian Royal Exchange and Lloyd's led to a brief, if badly timed, cameo as an internet entrepreneur.

Hodgkinson says: "I was never an internet millionaire. I was involved at the back-end of the boom when things were starting to get much more difficult. But that was how I became involved with Virgin. I was presenting a business initiative to them, and they asked me to come and join them."

The move proved to be a good one, taking in the successful launch of the Virgin credit card, currently running at over 500,000 customers, and now the general insurance roll-out. And it is a roll-out that, according to Hodgkinson, is already looking good, with inquiries running well over target.

"We have had significantly more calls into the call centre than we were anticipating at this stage," he says. "In quotes terms we are multi-fold above the plan we were expecting. In terms of how that translates into policies we will see. But it has been really, really encouraging, particularly in motor, which is one of the lead products people buy.

"The advertising we have done to date has pulled very well. It may well be that we will do some above the line advertising later in the year but at the moment we are more than happy."

Hodgkinson seems to be sitting pretty. He manages a finance company that is once again fully-owned by Richard Branson; his family life is healthy with four children in North Cambridgeshire; and the calls are flowing into the Virgin Money general insurance call centre.

If there is a weak spot, it is languishing in the bottom half of the first division. But he even has an answer for that. "Notts Forest will turn the corner as well," he claims.