Originally from Winnipeg, the home of Canada Life, it was as CEO of the UK arm of that insurer that Doug Brown made the switch to Aviva in 2021, succeeding Aviva Life’s CEO Angela Darlington.
Two decades after coming to the UK for what was meant to be a two-year stay, he is now firmly embedded in this country, with two sons that make fun of his accent and a job he describes as “one of the best jobs in the insurance industry”.
Aviva is by far the biggest bundled DC pensions provider in the UK, with over 1.7m active scheme members at the end of 2022, with £95bn in DC assets at that point, more than £25bn ahead of its nearest rival. So where is Brown planning to take the business?
“We have good momentum in the master trust business and we are continuing to invest in that. We are making sure we engage more and personalise more with our workplace customers. So we can hopefully direct them to the right solution. That could be do it themselves – we are looking at guided retirement – or it could be that they have complex needs and need advice, and we can drive leads into Succession Wealth.
“We have all the component parts and the focus is on ‘lets get those digital journeys easy to use, easy to navigate’, as people choose where they go. So they don’t have to re-key information in as it goes to advisers, or to whatever they do. That is consistent with why we purchased Succession Wealth.”
The insurer bought Succession Wealth, the UK’s largest wealth manager, in August 2023 for £385m. But with such a big workplace book of business, it is exploring ways to support the mass affluent.
New wealth app
“We are investing in our direct wealth opportunity. We have just launched an app to test with our employees in September. We are looking to bring that out in 2024. Part of part of what we’re looking at is a hybrid solution that is fully integrated within the app for people that are looking looking for that reassurance or that bit of guidance on what to do.
“We’re in dialogue with the FCA about guidance and think that’s something that will be very relevant for a significant portion of of the customer base who don’t have as complex needs or don’t have the means to pay for for full advice.”
Between advice and guidance
Brown confirms the content will be personalised to the individual but won’t be advice. He is one of several voices at big UK life offices talking of some new brand of support that sits between current definitions of advice and guidance.
“We believe in advice with Succession Wealth and we have our whole of market offering and our restricted offering. And we’d like to think there’s something in between that, that will be a benefit to those that aren’t looking for that full advice.”
Pension and property
Brown is open to the idea of allowing people to access their pension pot for a deposit for first home purchase.
“It’s interesting. I’m from Canada and they have an RRSP, which is a Registered Retirement Savings Plan. It’s a pension, right? And you’re allowed to take a loan or take money out from it. I did that to to purchase my first house. And then what happens moving forward is as you put contributions in, you don’t get relief on those contributions until you you pay back what you’ve taken out.
“So these types of solutions could be looked at,” he says.
Aviva’s healthcare business registered a 58 per cent increase in premiums in the six months to June 30th. While the crisis in the NHS is clearly a significant factor, again Brown points to platform technology improvements as core to the strategy to keep that momentum. “Obviously some of the constraints with the NHS are a factor there, but we are continuing to invest in the business – modernising our platform. It’s probably a couple of years’ work but we are continuing to invest because we want once again to make it easer for people to claim online and do more digitally.”
But he rejects notions that his company is experiencing out-of-the-ordinary service challenges as a result of the blockages caused by the post-Covid opening up.
“There has been a slight change in behaviour. You’re getting more people, more claims, but less severe claims. And so the combination of the growth in the book plus higher frequency meant that we did have a bit of a bit of strain on the operational side, which we’ve now corrected,” says Brown.
“We’re very open with advisers on that. And we put a lot of effort to make sure that we corrected it. We weren’t providing exactly the service that they should get and we recognise that. But that’s now being rectified. But we haven’t seen any any impact from a supplier perspective.”
Wellbeing claims effect?
Given the narrative often advanced by healthcare providers that wellbeing can improve health and reduce claims over the longer term, does Brown see that filtering through to reduced claims patterns?
“We’ve seen about 9,000 people a month use our digital GP service. That has a big impact in terms of people not having to miss work. We clearly do a lot of support on the group group protection side and we do a lot of early intervention. About 82 per cent of employees who used that support last year stayed in work or successfully returned to work. These services do correlate to better experience for the employers and ultimately the customers,” he says.
Aviva is unique in the UK market in the breadth of products it offers, covering asset management, pensions, healthcare, group risk, annuities and equity release. So how is the new high interest rate paradigm impacting these various channels?
Equity release slowing
“We still think there’s a need for equity release, but obviously rates are higher, and the market is down. But then we see other parts of our business like the annuity book doing well, and workplace.
“We’re still absolutely committed to the market and in fact we’ve just invested in our equity release business to provide a new quotation and administration system that will make it easier for advisers to deal with with Aviva.
“The market might be down for for a couple of years. We don’t know what’s going to happen with interest rates. But there was a time when we had equity release that was at 7 or 8 per cent. People get used to higher rates so perhaps that comes back – we are seeing still a lot of interest in it.
“A lot of people are quoting, but they’re just not finalising at the moment,” says Brown.
Flex and fix
Earlier this year Aviva was talking of a model that would see default strategies nudging non-choosing retirees into an annuity that would pay out later in life.
“We are looking at the best way to do this as a group annuity, or a deferred annuity. You’ll see what we will launch in 2024,” he says.
Mansion House rules
Brown acknowledges that the decisions about illiquid investments ultimately rest with trustees and IGCs. “We’re looking at what we can do ourselves through Aviva Investors to make sure that we can invest in these assets moving forward. The overall return and the benefit that it can bring are clearly there. But like everything, you have to understand the risks and you have to be able to explain the risks in the right way. “And so it needs full engagement to cross all that.”
Brown argues that the Compact is an important step in helping the UK to meet its green goals.
“There is an opportunity to invest in the infrastructure and the green finance that will ultimately help the UK meet its ambitions. So all of these things are connected. One of the benefits of of the Compact is, much like the benefits to Solvency II, is it means we can then invest more in these infrastructure assets to support the decarbonisation of the UK.”
It would be wrong to conduct an interview with a chief executive of a major employer without asking what plans they have with regard to artificial intelligence and machine learning.
Brown says there are numerous pilots going on within Aviva. “From a claims perspective there are things that can be done, and also in IT and code testing. And we are looking at how it can help the advice or guidance process.
“I am quite optimistic about the opportunities that it presents both in terms of what it can bring from a customer perspective, but also what it can bring internally from an efficiency sort of perspective,” he says.
So what does that mean for financial advice?
“You’ve got to make sure you get the quality assurance right. Humans can do things wrong and make mistakes, and AI actually could deliver something potentially better. But how you get people comfortable that it won’t make a mistake? That’s what we have to work through and understand. But there’s lots of opportunities, not just to to help the customer, but also to help advisers. There’s a lot of information out there and internally on different solutions, different funds and other things. So you can use AI to help make advisers’ job easier. But obviously they’re still involved in in the advice process.”