Aviva UK could shed £1bn nwp by end of year
Monday, 24 August, 2009 Leave a comment
Now I’m not really an “I told you so” kinda guy BUT just about anyone within the (insurance) industry who knows me, including some current/former senior NU staff and many Scottish brokers, will [finally] realise why I felt so strongly on the subject. My stance didn’t endear me to some at NU…even former employers…but I HAD to speak up on such an important issue. Particularly when I believed that, to join the massed ranks of brokers who content themselves with moaning instead of acting, would be the equivalent to a dereliction of duty to clients, employer(s), colleagues. I nearly forgot about the credibility and stability of the industry!
Take a look at this brief article from broking.co.uk. (Aviva uk could shed £1bn nwp by end of year Broking). I have consistently warned of the consequences of NU’s “strategy”. The reputational damage done. Their feeble attempts to provide anything resembling service to longstanding, stable and profitable relationships amounted to “lip service.” Instead they promoted and sought out relationships (sic) that could provide turnover (gwp) because, if NU secured market share, others couldn’t. A cunning plan in many sectors but not one with a “tail.” Ask any underwriter.
Long term relationships are built upon trust, mutual respect and customer service.
You can simplify the products and market them like a commodity but at the end of the day they are NOT commodities. You need distribution but not at the expense of sustainability of rating or commission. You can sell on price…but surely NOT if you compromise the integrity of the product or “after sales” service. Customers will tolerate a lot if the price is low enough and with countless millions spent on promoting a “cheap is good” message even those who knew this to be contradictory began to doubt.
It’s got to be a pretty bad day when a long term strategy, reflecting the nature of the industry and built upon quality, relationship, value & service is replaced by abandonment of underwriting – in pursuit of quantity (marketshare) – making relationships transactional and at unsustainable rating and commission levels. Not the kind of thing that a beleaguered staff can align with either.
Some may say that the leadership were more interested in individual glory. Even that they were greedy. Why else would NU and others abandon sound underwriting practises? Surely that would be like a bank abandoning governance and that is just plain ridiculous…isn’t it!!?
Let’s hope that the spotlight doesn’t fall on Aviva because spending an obscene amount of money on a change of name (instead of on improving customer service) whilst using the recession as a justification for making further staff cuts probably wouldn’t read very well.
Despite all of this I still don’t think that it is too late for Aviva to regain some respectability but it will take dramatic change at the highest levels and guys like John Kitson do, at least, appear to have a handle on how to start the process.