Insurance, banking’s more staid cousin, “sailed thorough the financial crisis” and has the capital cushions to weather future calamity, says Andy Briggs, chief executive officer of Aviva UK insurance. Amplifying, he says: “The insurance industry is supposed to have enough capital to handle a one-in-200-years event. At Aviva we have 90 per cent more than that level. Even if we got a one-in-200-years event we would have enough capital for another one in 200 year event after that. Consumers can be confident that we will be there when the chips are down.”
Things currently look set fair for the industry, Briggs says. Both life and pensions and general insurance – houses, cars and health – are showing decent levels of growth, he says, the pensions industry in particular boosted by auto-enrolment, launched in 2012.
Briggs says auto-enrolment has been the pensions sector’s game-changer, even though current and future contribution levels are still too near the nominal for his comfort. He says: “Auto-enrolment has been a great success. Ten million extra people are paying in 2 per cent of their salary, 1 per cent from them and 1 per cent from their employers. Next April that will become 5 per cent and 8 per cent in April 2019. While it is great to have so many more people saving for their retirement, those levels need to go up to 12 to 15 per cent. But it is obviously a step in the right direction.”
We are speaking in Aviva’s offices in the City of London, two days before last week’s Budget, and, asked what he wished for from the Chancellor, Briggs says: “To be honest, I would like nothing.” He means by this that there has been too much tinkering with pensions in recent years, and a period of quiet would be welcome. In the event, he gets his wish, with none of the rumoured announcements on pensions tax relief or annual allowances resurfacing.
And there was also a Budget bonus of a freeze on insurance premium tax, the sector’s bête noire in recent years. Huw Evans, the director-general of the Association of British Insurers (ABI), reacted with relief that this “stealth tax” had not been increased again. Briggs, who is chairman of the ABI, says: “We are obviously no supporters of insurance premium tax. It penalises people who are doing the right thing by their health, homes or cars. The Crown’s take from insurance is more than it is in alcohol. I find that worrying.”
Briggs joined Aviva’s Board in April 2015 as chief executive officer of Aviva UK & Ireland Life, to lead Aviva’s enlarged UK Life business following the acquisition of Friends Life Group, where he had been group chief executive.
He has more than 25 years of operational and executive experience in the insurance industry across life assurance and general insurance, both in the UK and overseas. The Aviva UK boss is also a former chief executive of Scottish Widows (financial services), chief executive of the general insurance businesses of Lloyds Banking Group and head of Prudential Group’s Retirement Income business (insurance).
Briggs has obviously experienced most of the past generation’s changes in the sector. The virtually moribund final salary pension scheme model in the UK, being replaced by less generous direct contribution schemes? “Many of us foresaw that closure of direct benefit or final salary schemes to new members would be extended over a period of time to all existing members of such schemes.”
The fallout from the PPI (payment protection insurance) scandal? “Undoubtedly we were hurt by it. It was much more in the banking sector but because it was an insurance product it had a hangover effect on us. In many ways, whether it is fair or not doesn’t matter. What matters is what customers think.”
The latter leads Briggs on to one of his favourite subjects, consumer engagement. He says the industry has got better at it, but there is still some way to go to rebuild trust in the wider financial sector. “There’s lots of possibilities in terms of growing the insurance market, there are still significant areas of under-provision. Only one in three households in the UK have life insurance cover. If there is death or illness we are not there for the others.”
He estimates that five million self-employed people don’t currently have pension provision. “We still don’t get it right as an industry all the time. There’s more we need to do as an industry to build the trust of the consumer.”
A key area Briggs identifies for commercial potential for Aviva and its peers is Britain’s ageing population. The silver pound is living longer and is deferring retirement. He can become evangelistic on the subject, also having a wider interest in the issue from his position as the government’s Business Champion for Older Workers with Business in the Community.
“There are two drivers why people are working longer,” he adds. “They are living longer and they will have a better standard of retirement if they have longer for contributions to be made. And people are saying ‘I might be in my sixties, but I still have lots of enthusiasm and lots to contribute. I still enjoy the social and intellectual stimulation of work’.”
I ask the Aviva chief if this is unfair to younger workers, Generation Rent, as the baby boomers have the capital, the bricks and mortar, and the jobs?
“No, not at all. About 1.5 million a year are leaving the workforce. We only have three-quarters-of-a-million coming through the education system each year. Businesses are going to struggle if they don’t embrace older workers. Inclusive and diverse workplaces, which also includes gender, ethnicity, disability, etc, make better decisions. One plus one can equal three. The younger workers benefit from the wisdom of those who have been around for longer, while the older workers benefit from new ideas.”
On another subject, Briggs says digitalisation will increasingly become key to selling insurance products as it will keep costs low and radically cut the time involved. Aviva, under group chief executive Mark Wilson, has set up its Digital Garage brand in east London’s trendy Hoxton Square to spearhead product development and innovation. On the night I heard Wilson give an informal speech there a year or so ago it was all bare brick walls and vintage posters, even if Kate Moss was nowhere to be seen.
Easy to mock the juxtaposition of straitlaced insurance with “cool”, but Briggs is adamant that digitalisation and robotics are “absolutely fundamental” to where the sector is going. “People are interacting with us digitally. It’s crucial, critical,” he adds. He cites pensions auto-enrolment as being one of the areas that benefited heavily from the use of digitalisation. “It would not have been possible to do at sensible prices without digital.” With its MyAviva app, Briggs says the company can often offer 20 per cent discounts to consumers because of the reduced administration costs. “We are definitely leading the pack on digital in the UK.”
An interesting new area for the company, he says, is a move into prevention rather than pure premium-and-payout in insurance terms. He gives a couple of examples: Aviva working with a start-up company that produces a device put on cold water pipes into homes that alerts you on your smartphone when there are abnormal water flows which if unchecked could cause serious damage; also a device that screens people for coronary heart disease and diabetes. Briggs says: “People prefer [bad events] not happening in the first place. Rather than just selling insurance products that kick in when things go wrong, let people know how to prevent them in the first place. If they do we can then offer lower premiums.”
Some things never change, however. Like soaring motor whiplash claims in the UK. Aviva, the UK boss says, has just won a court case against one such claimant after proving that the injury did not stop his other hobby. What was that? “Cage fighting”, says Briggs.