Aviva Canada gets back to the fundamentals amid turnaround

Aviva Canada gets back to the fundamentals amid turnaround | Insurance Business

Aviva Canada gets back to the fundamentals amid turnaround

Finally, some good news coming out of Aviva Plc after the group reported full-year financial results that saw its operating profit climb by 6%, operating EPS rise by 8%, and general insurance net written premiums increase by 2%. Amid this rosy picture, it was Aviva’s Canadian operation that was singled out as helping to drive the company’s recovery. In fact, Aviva Canada’s combined operating ratio improved from 103.1% to 97.8% while net written premiums also inched upwards by 5% to $5,280 million.

The CEO at the centre of these positive results is Jason Storah (pictured), who was named to the head role in June 2019. While he’s leading the company through a better time after a long period of tough results, he says these figures are a “culmination of work that I and others in the team have been focused on for a couple of years now.”

Storah provided further insight into the key items driving the Canadian business’s 2019 full-year results.

“First, we’ve been really rigorous in getting back to the fundamentals of what makes a good property and casualty insurance company,” said Storah. “Number two, we’ve stayed focused on the actions that we put in place and the outcomes that we wanted to deliver, and we didn’t allow things to distract us. And then the third thing is we’re really focused on doing the right things for our customers, and claims is the obvious place for that. We’re seeing great improvement in our customer and claims sentiments, and NPS scores.”

Storm conditions, or lack thereof, also gave Aviva Canada some relief considering that 2019 had less significant catastrophe events and related losses than previous years. Nonetheless, Storah acknowledged that hoping this quiet period will last is not enough.

“We can’t determine the weather and we can’t determine CAT losses,” he explained. “Whether it’s this year or in the future, we are going to have natural catastrophes and weather events, so the opportunity for us is to make sure that we’re there for our customers. While last year and currently this year, we feel good about our claim service and our service levels across the business, the moment you get tested is when you do have those spikes in claims.”

One of the factors that dragged Aviva Canada’s results down in the past were more large losses than the company had anticipated and would expect for a company of that size. The “positive trajectory for the last six to nine months of large losses becoming more normalized” is an indicator that the company has “got the underwriting processes and risk selection in our book to a better spot,” Storah told Insurance Business.

During other results seasons, it wasn’t just a succession of storms that previous CEOs blamed for poor figures, but also the turbulent Canadian personal auto insurance market. However, thanks to the work of regulators in Ontario and Alberta, Storah said that there is now “light at the end of the tunnel.”

Read more: Aviva has ‘strong action plan’ to offset Canadian turbulence

“A year ago, I wouldn’t have said that with as much conviction,” he continued. “[We’re] really grateful to the sound, intelligent, objective thinking from FSRA in Ontario and the balance that the government’s brought to acknowledging that the insurance industry needs to be healthy and that we need appropriate competition and choice for consumers…In Alberta, the regulator has definitely moved away from where they were a year ago and they acknowledged that some of the circumstances in place where companies weren’t able to charge appropriate premiums aren’t healthy for anybody – it’s not healthy for consumers and it’s not healthy for insurance companies.”

He added that he expects regulators will hold insurers accountable for offering sustainable solutions and pricing for consumers over the long-term now that this market has got over some of hurdles and pain that it’s been facing over the last few years.

But 2019 didn’t just see a turnaround in Aviva Canada’s business – it also saw a new managing director of broker distribution and marketing, Mark LeBlanc, join the firm. The new recruit has strong relationships with many brokers, said Storah, which is beneficial seeing as the broker channel still represents the “vast majority” of Aviva Canada’s business at 80% of its volume. Brokers likewise represent an important feedback loop for the company.

“We have some really exceptional broker relationships that we rely on, quite frankly, to tell us what’s going on in the market, and to help guide us when it comes to developing our propositions and improving our claims service, so brokers are fundamentally important to our business going forward,” said Storah, adding that Aviva Canada is also fortunate to be partnered with RBC General Insurance, which it acquired in 2016.

“[It’s a] testament to both RBC and our brokers that they worked with us over the last two years as there were some pains and things to improve. They stuck by us, they worked with us, and we’re now looking forward to lots of great momentum going forward with both our brokers and RBC.”