Unite's new car insurance partner shows increasing complexity of affinity deals

Unite, the UK's largest trade union already provides a range of financial services to its members and has recently launched a new car insurance comparison service with "Unite Protect Insurance". This is a trading name of Union Income Benefit (UIB), which also provides a range of other insurance services to the union, including AD, travel and Female Cancer covers. 

UIB provides the "Unite Protect" branded aggregator via Vast Visibility Limited; a digital specialist with a background in motorcycle insurance and which also offers white label comparison sites for brands including Asda and Bauer Media titles (e.g. Car, Motorcycle News, Heat and Grazia). 

The situation is further complicated by Unite's separate provision of car insurance through its longstanding relationship with household insurance specialist, UIA; itself a provider to a range of other large trade unions.   

UIA partners with Autonet to provide car insurance to Unite's members, as well as travel insurance with AllClear Insurance Services and pet insurance with Petwise.

The range of separate and competing deals available to Unite's members is not altogether unusual in the trade union sector. This may reflect the need to cover different distribution strategies, but will inevitably impact on the clarity of marketing messages and the need to share margins with a wide range of providers. 

Allianz and LV= joint venture: the impact on partnerships

Today's announcement of the joint venture being created by Allianz and the general insurance arm of LV=, has focused mainly on the scale of the new business and its position as the UK's 3rd largest personal insurer. 

The reports largely ignore the impact of the new venture for affinity partners of the two insurers and it may be worth looking at the current differences in their partnership strategies. 

For such a large insurer, Allianz has been largely absent from some partnerships' distribution, with the exception of pet, motor and some specialist covers. For motor partnerships, it has concentrated primarily on manufacturer schemes such as Ford and BMW Group (unusually, for BMW it also provides home and travel covers), but also others including Jaguar, Dacia, Kia and Mazda. The bulk of these schemes involves Allianz working with specialist administrators including Europa Group and Original Insurance. 

LV= has a long history of working in affinity distribution and currently partners with Unison (car), GMB (car) and Prospect (car and home). It also has one of the UK's longest affinity relationships and has worked with the CSMA since 1923. LV= also provides a number of life and protection partnerships which will not be part of the new venture. 

Partnerships are likely to represent a significant distribution channel for the new business, but it is questionable whether these will match the premium levels of Aviva, RSA, Ageas or UK Insurance. 

N Brown faces £40million redress for add-on mis-selling

Online retailer N Brown; best known for the JD Williams, Simply Be and Jacamo brands is faced with a compensation bill of up to £40million for add-on mis-selling. This relates mainly to the sale of credit insurance products between 2006 and 2014, and comes on top of an earlier penalty of £22.9m for PPI mis-selling, which hit profitability last year. 

The fine follows a review undertaken by the FCA into add-on insurance products which were deemed to have little or no value for customers. In February 2017, the FCA also agreed a "redress scheme" with Express Gifts, a subsidiary of Fiindel plc, for insurance products providing inadequate value. 

Financial services represent a significant source of revenue for N Brown, which is FCA registered in its own right, although this primarily relates to the provision of consumer credit. 

The "third party underwriter" responsible for the products and which partnered with N Brown has not been named in press reports, but the company has suggested that it may seek the insurer's assistance in offsetting the fine. 

We believe that the FCA may ultimately look in more detail at the regulatory issues surrounding insurance affinity partnerships and particularly, the ways in which appointed representative (AR) and introducer appointed representative (IAR) relations operate. Regardless of this, the demand for rigorous and effective compliance support has once again been highlighted. 

AIG LIfe partners with RBS for life cover

AIG Life has been selected as the sole protection partner for customers of Royal Bank of Scotland, NatWest and Ulster Bank. The partnership is designed to provide a range of "simplified" protection products, including life, critical illness and a guaranteed whole of life plan aimed at the over-60s. 

The partnership represents a significant win for AIG Life, which only announced its first significant affinity partnership in May 2016, when it secured a deal with the general insurer NFU Mutual (see our post dated 10 May 2016 for details). 

It also marks a significant loss for Aviva, which has worked with RBS since at least 2010. Aviva does however, retain protection partnerships with Barclays and Santander banks. 

The RBS Group continues to work with UK Insurance for home insurance, but ceased offering car insurance in January 2017, other than for its "Private Banking" customers. 

Nationwide ends motor partnership with LV=

Nationwide, the UK's largest building society, has announced the termination of its motor insurance partnership with LV=, with effect from 30th June 2017. From this date, the society will no longer offer new policies and it is expected that the management of renewals will pass to the insurer. 

The deal, estimated to be worth £5 million per anum, is no longer considered a strategically important one for the society. The end of this relationship also marks the end of one of the last motor insurance partnerships provided by any UK building society. It remains the case however, that most of the major banks continue to provide motor insurance to their customers. 

It is noteworthy that Nationwide's 5-year home insurance partnership with RSA, announced in December 2015, has still not commenced, even though it was scheduled to launch in February 2017 (see our post dated 17 December 2015 for details). This means that Nationwide home insurance continues to be underwritten by UK Insurance, which also provides travel cover on Nationwide's "added value" current accounts. The society partners with L&G for life and protection policies

Virgin Money tries (yet) another partner for life assurance

Virgin Money has announced plans to launch a new life assurance partnership with BGL Group, following earlier efforts with Scottish Widows (2006), Friends Provident (2009) and Friends Life (see our post dated 20th August 2013 for details).

The new 5-year partnership is due to start in Summer 2017 and will include a range of term and critical illness products. Despite the strength of the Virgin Money brand and its apparent attractiveness for many, it is understood that life assurance has previously seen disappointing results. In addition, Virgin Money does seem to change its provider partners on a regular basis, but is currently working with Ageas for home and motor insurance, InsureandGo for travel insurance and UK Insurance for pet covers. 

The more significant development is that it represents BGL Group's first foray into life assurance partnerships, following its many successes in general insurance partnerships with the Junction brand. 

It is not yet clear whether BGL will provide a panel solution or instead, will follow the model of its "Beagle Street" brand which provides life assurance underwritten solely by Scottish Friendly.