Following the news that Aviva has opted to end a second major network deal within the last 12 months, what does this mean for the relationship between insurers and networks and how will both parties be affected by the termination of this deal?
It was announced recently that Aviva will no longer be a part of the Willis Networks’ panel of insurers after the company chose not to renew its existing deal with the broker.
The current deal will officially end on December 31st, but it is expected the two firms will continue to operate closely in terms of personal and corporate operations.
However, this is the second arrangement that Aviva has brought to an end in the last year, following its decision to terminate its partner status with the Broker Network, owned by Towergate, because the insurer believed the deal was not in its financial interests.
According to Insurance Times, Willis’ members account for around £70 million worth of premiums at Aviva and is the network’s largest single book of business.
It is thought the deal broke down because the terms of renewal put forward by Aviva were “not acceptable” to Willis, which has 142 members and controls a combined total of £500 million of gross written premiums.
Willis UK president Brendan McCafferty said: “We want to thank Aviva for their support over many years, but we are confident that this is the right decision for our members and for Aviva.”
The end of networks?
The decision to end these business arrangements is believed to have been taken because Aviva is keen to focus more of its operations on its branch network and is increasingly looking to develop relationships with directly with brokers.
It is believed the company is not alone in thinking this way and other insurers are thought to be considering their existing network arrangements and questioning the merit of these deals.
James Sharp, business development director at a rival network, explained: “What goes wrong is when networks ask insurers to give them five or ten per cent more than they would have given brokers in the first place and the network will make sure that the account grows.”
“This is all very well when networks are growing, but now they have stopped growing and they are not delivering the numbers.” he added.
Turbulent times for Aviva
The insurer has been in the news regularly in recent weeks and faces some tough challenges in the near future. After taking a writedown on its US operations, Aviva reduced its dividend payment to shareholders by more than a quarter, causing shares in the company to fall by 12 per cent.
It was then hit by the news in April that popular relationships director Janice Deakin is to leave the company and take up a role as commercial director at Arthur J Gallagher from August. She has been placed on gardening leave until this time.
Following this news, Aviva’s new chief executive Mark Wilson – who replaced Andrew Moss following a shareholder revolt – announced it is to cut 2,000 jobs over the next six months as part of a global restructuring programme to cut costs.