Aviva upbeat as it strives to become “320 year old digital insurance disrupter”

Derek du Preez Profile picture for user ddpreez March 9, 2017
Summary:
UK insurance giant Aviva said this week that digital is its “IP” and that it was making progress in building out its “critical digital infrastructure”.

Aviva signage head office 400x800
Aviva, one of the UK’s largest insurance providers, delivered an upbeat set of results this week, where Group CEO Mark Wilson placed digital at the centre of the company’s strategic plans. Wilson said that he wanted Aviva to be a “320 year old digital insurance disrupter” and expressed the belief that digital is now the company’s “IP”.

The insurance provider beat analyst expectations and reported a more than 50 per cent increase in pre-tax profits of £1.8 billion for the year to December 31. General Insurance premiums also grew 15%, as did its life insurance new business, which was up 13%.

CEO Mark Wilson said:

Aviva’s results are simple and clear cut: more operating profit, more capital, more cash, more dividend. And there is more to come.

Aviva’s financial position has been transformed and a distinctly stronger balance sheet and excess capital give Aviva more options. We are now actively planning a capital return to our shareholders and debt reduction in 2017 and will invest further to grow our businesses.

diginomica has previously reported on the insurer’s digital plans - which when considering that the firm can trace its roots back to 1696 - are quite ambitious. They centre around building up a core digital capability in different geographies, in the form of its Digital Garages, creating a centralised data hub of customer information, pushing new online portals to customers and forming partnerships.

Digital is our IP

Aviva’s results outline how in the UK it has built a ‘critical digital infrastructure’, which connects 15 million of its customers to a single database. This supports MyAviva, the company’s one-stop-shop online portal for customers, which cost £13.5 million to build over 12 months, and has seen registrations double over the past year to 5 million.

The insurer added that it is now also developing its digital capabilities in international markets, which is evident from its sale of a 60% stake in its Hong Kong business to Tencent and Hillhouse. It said that together the companies will launch “digital insurance products in a market that has historically been dominated by high cost agency and bancassurance distribution channels”.

Wilson told investors this week:

The story on digital, our full year results, I believe is really about our IP. Our digital garage has become a bit of a tourist attraction, with everything from government ministers to investors to tech firms out of the U.S., visiting it.

But it's much more than that. Some of our partnerships, partnerships such as our Tencent and Hillhouse deal in Hong Kong, were predicated on the uniqueness of our digital IP. And we believe it makes us the partner of choice. And I think the people we're talking to, they seem to be saying that to us.

Wilson added that he definitely wants Aviva to be “in the digital space” and said that what the company had achieved in the last 12 months makes this interesting. Speaking about the highlights from the year, Wilson said:

We now have, as we said we would, we have all of our customer systems in the UK now talking to each other. I think that's pretty unique from any global insurance business. And it gives us flows into MyAviva, which gives us a significant advantage and transforms how we not only interact - the customer interacts with us, but, how we service them. We're now starting to roll out in our call centers simple screens that have all the products on. It really does simplify our business, take out cost, and make it a pretty simple customer experience.

We've also made good progress on increasing our user numbers. We said that was a focus for last year. And the number of registrations for MyAviva, have doubled to 5 million. And we are seeing this drive increased sales through our digital direct channel, which grew to 1.1 million sales last year. Now, the other interesting element is our pricing, where we have developed our IP to enable us to price across our products, so, across multiple products together in different business lines in many cases without asking any underwriting questions.

So, the three clicks, and it's yours. And that's through a combination of MyAviva, which is all our IP, and Big Data and our pricing algorithms. This is the future.

My take

It appears that Aviva has seen solid success from its digital investments thus far. It said that its margins have improved because of the migration onto the new digital platform and that it would continue to spend “a lot of money on digital”. One to watch.

It’s also worth checking out my colleague Phil Wainewright’s 7 disruption tips for the digital zeitgeist from Aviva’s CDO Andrew Brem.

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