Wednesday, 27 June 2012

RSA renews Clydesdale and Yorkshire Bank partnership

RSA has announced the renewal of its partnership with Clydesdale and Yorkshire Banks for the provision of home and motor insurance for 5 more years. 

It's another positive move for the RSA team, which has been increasingly active in partnerships in recent months and which has also announced recent wins with John Lewis Partnerships, Homebase and Argos. This partnership was previously held by Junction which picked it up in 2003, when it was said to be worth "£317 million". 

Yorkshire and Clydesdale banks continue to partner with Chartis for travel insurance and Hiscox for high value household insurance. In addition, both work with Giles Insurance Brokers to source commercial insurances for their business customers. 

Tuesday, 26 June 2012

Tesco Bank re-selects Aviva for protection

Tesco Bank has announced a 5-year partnership with Aviva for the provision of protection products, including critical illness and an over 50s option. The partnership will commence later in 2012 and products will be available online and via the phone. 

Friends Life currently provides a range of similar products for Tesco Bank and has done so since December 2009. Aviva had a previous partnership with Tesco to provide protection products, which ended in early 2006. At the time, an unwillingness to commit the levels of resource needed by Tesco was give as a reason for the change. 

It is not known whether the protection partnership was the subject of a detailed tender exercise, but it is understood that Tesco Bank did not ask Ageas Protect, the protection arm of its general insurance partner, Ageas, to tender for the protection business. 

Thursday, 21 June 2012

Can Affinity Marketing Work for Insurers & Brokers on the Aggregators?

Copy of an article published on this week's Post Magazine website:

It’s hardly surprising why insurers, brokers and affinity groups want their products to appear on the aggregators; when for personal lines, it represents an ever-expanding marketing channel. The rush to the channel has however, recently led to a re-appraisal of the relationship between providers and their partners, as well as a greater degree of realism on both sides.

The danger for insurance providers has always been that using affinity brands runs the risks of “cannibalising” customers and perhaps more importantly, losing many of the benefits of working with affinity brands in the first place. For providers, these include the strength of those brands in the eyes of their customers, members or donors, the access and channels they command and increasingly, the valuable data that can be used to help underwriters and marketers.  

Affinity groups like the aggregators because of (relatively) low acquisition costs and the ability to reach customers who might not otherwise access the brand. However, these new customers can cause a real problem to insurers and brokers, who find them to be very different from those an affinity partner attracts through its more “traditional” channels.

Take the example of a retailer such as Marks & Spencer attracting a new (and different) type of customer through the aggregators; when compared with more traditional consumers, who regularly use its stores or branded credit cards. This may sound like a benefit to both parties in a partnership, but not if new aggregator customers are overly focused on price and demonstrate limited brand loyalty. Some affinity partners may argue that this is not their problem, but if an account’s performance and loss ratios suffer, insurers will need to take rating action which can impact all the affinity group’s insurance customers.

In the recent past, some insurers considered charging higher rates on the aggregators than through other channels, for their affinity brands, but these efforts have been resisted by the major aggregators who can negotiate strongly in ensuring that their prices are not undercut elsewhere. Aggregators’ ultimate control over the number and type of brands that appear on their sites is also something that providers are reluctant to ignore! 

Given that charging more on the aggregators is not viable, most providers have had to look at alternatives. Some have gone as far as removing poor performing affinity brands from the aggregators, but this is unlikely to provide a viable solution in a serious “partnership”.

More sophisticated providers have instead adopted a more creative approach. Insurers have again come to realise that the best affinity groups can add real value to the partnership through the use of data that can be reflected in “dynamic pricing” to reach the most profitable and loyal customers; even through the aggregators. Providers can and must access valuable data from their partners – for example, evidence of a profitable existing relationship – such as a retailer’s credit or store card, a motor manufacturer’s finance agreement, or a lender’s credit score. In these cases, rating can be enhanced and a targeted quote provided, to ensure the profitability of the wider partnership.

There remains little doubt that the aggregator channel is here to stay, but affinity groups are increasingly aware that the best partnerships require more than just brand strength or product enhancements to work effectively on the aggregator channel. In many respects, the sharing of data and common objectives, suggests a far more equitable relationship between the provider, the affinity group and the aggregator. It also serves as a great reminder of the complexity but also the benefits of partnership marketing. 

Neil Batley
Managing Director
Benalder Consulting

Friday, 15 June 2012

First Direct renews partnership with Equity

First Direct has announced the extension of its long-term partnership with Equity Insurance Partnerships (EIP) and which has now been in place for over 5 years.

The renewal of the relationship has been highlighted as "long-term" but no details of the length of the deal have yet emerged. It does however, represent an impressive result for EIP, which has a strong stable of motor partnerships with brands including, Honda, Nissan and Santander.

First Direct, in common with its parent HSBC, continues to work with Aviva for its home and pet insurance offerings. HSBC however, maintains a long-term partnership with Junction for its own motor insurance.

M&S and HSBC extend banking joint venture

Marks & Spencer has announced plans to open 50 in-store bank branches over the next 2 years, and to re-brand M&S Money as M&S Bank.

It is a significant development for Marks & Spencer and in addition to the card, loans, savings and insurance products currently offered by M&S Money, the product range will extend to current accounts this autumn and mortgages at a later date.

It is understood that M&S Bank will operate under a separate banking licence to HSBC, but that it remains a subsidiary of the bank. However, profits will be continue to be split 50:50 between the 2 partners; last year the financial services business contributed profits of just over £50 million to M&S's operating profits.

The reputational risk of offering M&S branded mortgages is probably the most significant issue for the new bank, but these will effectively be HSBC products, and presumably subject to the same underwriting rules. The move into mortgages and current accounts pre-empts a similar move expected by Tesco Bank this year.

Thursday, 7 June 2012

L&G renews major partnership with Nationwide

L&G has announced the renewal of its partnership with Nationwide, to market protection products through the building society's 1,000-strong adviser network.

The partnership means that L&G maintains its leading position as a provider of term and critical illness products to the society's customers and builds on other significant partnerships, including those with Yorkshire Building Society and Barclays announced in the last 12 months. 

However, as with its approach to general insurance partnerships, Nationwide continues to work with a range of providers including AXA Sun Life, Aviva and Pinnacle to offer an over 55s life policy, income protection and "Lifestyle Protector" products respectively.