What does it take to formulate and deliver a personal lines insurance strategy capable of navigating even the most undulating market conditions?
The answer might vary from organisation to organisation but for Owen Morris (pictured), managing director of personal lines at Aviva, it lies in having a product offering, operational model and internal team as diverse as the customer base they support. He noted how the insurer got ahead of rising premiums by putting up its rates early.
“So, over time, our rates have probably been slightly more balanced than some,” he said. “That’s not to say it hasn’t been painful for customers and we’re always trying to contain those increases. Looking at where we are now, I think the market has softened a little bit for motor this year, not massively but when you look year-on-year, while people are still seeing renewals go up, it has definitely come off the boil.
“Similarly on home, we’ve seen rates in the last quarter start to flatten out, whereas they rose quite sharply in the first half of the year. Generally, I think the outlook from the customer perspective and our perspective is reasonably stable.”
From Aviva’s perspective, Morris said, it has been interesting to see how the progress of its personal lines division – which grew by over £1 billion from the beginning of 2023 to half year 2024 - is being driven by growth in its intermediated business as well as significant growth in its retail arm. Its intermediated business alone has grown 10% in the first three-quarters of this year to date.
As how to Aviva’s intermediated business competes with its retail arm, the answer is simple – “it doesn’t.” The way the business is structured means its MD of broker business, its MD of private clients and its MD of retail don’t have to trade against each other but rather look for ways to support the healthy and sustainable growth of each of those markets. “We don’t have any ‘favourite children’ among those very different businesses,” he said. “They each work in their own way, they’ve got their own roles to play, and we want all of them to grow and thrive.”
Elsewhere in the business, its COR has been “gently improving” as well.
“The underlying profitability of the business has more than doubled over the last three and a half years, and there’s hopefully more to come,” he said. “Thinking about our customer scores, they’ve been doing really well this year and a lot of that is down to some of the work we’ve been doing in claims, as well as what we’ve been doing in digital.”
Customer feedback remains at the heart of any decision-making process, and it’s with the feedback of customers in mind that Aviva is putting more telephony support back into some areas. It might sound old-fashioned, he said, but despite the significant popularity of digital channels – particularly of online chat – there are still situations where picking up the phone and talking to somebody can make the insurance process easier.
As a result, telephony support is available across all of its ‘yellow’ Aviva brands, which, in turn, has paid off dividends with regard to customer scores, but also other essential metrics including retention rates and sales.
At the core of Aviva’s personal lines growth strategy over the last three years is its “ice-creams”, Morris said. “We were traditionally very good at vanilla ice cream. So, if you happen to be a fairly safe risk, perhaps in the home counties of England with a newer vehicle, we were very good at writing those risks. But when we looked at some other parts of the market, our proposition was not as attractive to customers in those segments. .
“What we’re doing is growing out into those other parts of the market. So, for example, younger drivers with our Quotemehappy Connect proposition. Or people who want a more eco-conscious policy with Aviva Zero – which we’ve already had one million sales on. We’re looking to effectively expand and appeal to more people so, rather than just having one flavour of ice-cream, having many flavours.”
An effective analogy for the variety of Aviva propositions is that of an airline – you can pay for first class, business class or economy. Any options will get you and your luggage to your destination safely, it’s just a question of additional advantages on the journey itself. Take for example, Aviva’s Quotemehappy Essentials, Morris said, which is aimed explicitly at drivers who want affordable and effective insurance without the bells and whistles.
The personal lines insurance market is incredibly diverse, he said, and so it’s rewarding to be able to develop propositions that meet the requirements of so many different prospective policyholders. Touching on how his team manages to balance the varying requirements of each proposition without neglecting another, he emphasised that it all comes down to using customer feedback to understand their requirements and expectations.
“So, it’s really a combination of getting your language right, getting your content right and sometimes using a slightly different brand or a different way of approaching certain segments so they know what they’re getting and how it matches their requirements,” he said. “We want to make sure our customers expect we’re matching exactly what our customers expect to get, whatever they’re buying.”
