Towergate:: the price of being "more corporate"!?

It is a rare occasion when I praise Aviva for their strategic decision-making but this is one such occasion! However, I was immediately reminded of the spat of a few years ago that saw Towergate and Zurich “agree to disagree” over respective strategies.

tripWhilst BIBA attempt to appease the most blinkered of their membership by “wasting” money on a Deloitte review and a declaration that they intend to fight an EU move toward hard [commission] disclosure, the reality of a badly broken model is glaringly obvious…

A source claimed that the network decided to disengage after it had become frustrated at Aviva’s lack of understanding of the model and the value it offered the provider: somehow I doubt it is a failure to understand the model and more to do with a lack of faith in the ability of the model &/or Towergate to adapt to survive a turbulent economy and in the future FS landscape.

Unsurprisingly there is no mention of the “value” that is LOST to customers through the network’s “central charge” and unsustainable commission rates! Both of which impact their (Aviva’s) ability to achieve underwriting profit or to offer, reduced, sustainable rating at a time when the customers’ needs far outstrip this, or any other network’s demands: driven by their need to keep on selling in an attempt to outrun the tail of their own making…it didn’t work for the banks and it may not work for them for exactly the same reasons.

A spokesperson for Aviva responded: “Our decision is based on our commitment to build strong, local relationships with our brokers to ensure that they get the best deals with Aviva.

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UK Insurance: Nobody expects the Spanish inquisition…again!

Just in case anyone who read this thought “that doesn’t really apply to the broader [general] insurance market” and that I may be totally wrong to suggest that further questions may follow, you may want to take a look at this. Also from OFT and relating to the motor insurance market BUT with implications for activities involving household, motorcycle and commercial vehicle insurance

The OFT today published, for consultation, commitments offered by the insurers Ageas Insurance Limited (formally Fortis Insurance Limited), Aviva plc, AXA Insurance UK plc, Liverpool Victoria Friendly Society, RBS Insurance Group Limited, Royal Sun Alliance and Zurich Insurance plc, and the IT software and service providers Experian Limited and SSP Limited.

The formal offer of commitments by the parties follows an OFT investigation into the exchange of broker pricing information between insurers in the private motor sector through the use of an Experian Limited pricing and competitor analysis tool, Whatif? Private Motor.

The tool, widely used throughout the industry, allows insurers to access not only the pricing information they themselves provided to brokers but also that supplied by other competing insurers. The OFT, having investigated the matter, warned the firms that certain features of the information exchanged through WhatIf? Private Motor raised competition concerns under the Competition Act 1998 and/ or Article 101 of the Treaty of the Functioning of the European Union…

I come back to the REAL POINT of what I am trying to get across. The insurance industry is not serving its policyholders as it should. Just because current investigations haven’t touched upon activities in the Commercial and Corporate market does not mean that future investigations will not. In fact, insurance professionals who still care about the industry should probably welcome such investigations for I fear this may be the only way that we will rid ourselves of those intent upon bleeding the market to its long term detriment!

I really never really thought of FSA or OFT as anything like the Spanish Inquisition, except insofar as the element of surprise is concerned. I reckon most people would be very surprised if they brought about any kind of change to UK Financial Services, that benefitted the customer/policyholder, despite any good intentions! Needless to say that, if my understanding of this investigation is correct, this is much more about protecting the interests … Read More

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