Aviva’s efforts to improve service levels for its private medical insurance (PMI) customers will not affect growth plans, with service expected to return to normal by the end of the year, according to chief executive officer Amanda Blanc.
Speaking on the insurer’s half year 2023 results, Blanc reiterated the apology to health insurance customers for waiting times when calling the firm and also revealed it had become “the number one player in protection” in the second quarter of the year.
Aviva PMI sales soared by 58% over the first six months of the year, contributing to an 18% rise in new business for the combined health and protection arm compared to the same period last year.
At the end of last month Health & Protection exclusively revealed Aviva was reviewing its growth plans for 2023 and 2024 and had apologised to PMI customers as it continued to tackle the issue of long waiting times for its call centres.
“We are sorry our PMI customers are experiencing longer waiting times because of greater demand,” Blanc told Health & Protection during a media call.
“We are taking actions to improve the service,” she said.
Those measures included the launch of digital services via the MyAviva app, and the recruiting of new staff.
“We have recruited heavily into the team,” Blanc said, but noted, “it is a sophisticated product, so we have to make sure people are fully trained.
“We expect levels to return to normal by the end of this year.”
“We do not expect this to mute our growth, we’re making good progress,” Blanc added.
Sales growth
The issue with call waiting seems not to have affected the company’s sales growth and its protection operation also improved.
“We continue to see very strong demand for private health insurance, with sales increasing by 58% as we expanded our services to corporate and individual customers,” Blanc said in a report detailing the results.
“In individual protection we have delivered sales growth of more than 20%,” Blanc said.
Looking at the overall protection and health business, sales were up 23% with strong growth in health and individual protection, Aviva said.
Value of new business (VNB) was up 18% to £118m compared to £100m for the first half of 2022.
“That was driven by higher volumes in health together with beneficial assumption changes made in 2022,” Aviva said.
“We continue to expect strong demand for protection and health products,” Aviva said.
Health and protection played a large part in the growth of VNB for the company overall.
“VNB increased by 7% to £319m driven primarily by BPA, workplace, and protection and health,“ Aviva said.
Doug Brown, CEO UK and Ireland Life, said the group’s health and protection businesses had performed “very strongly” in the first half of the year.
“Growth continued in health where we saw excellent trading across both consumer and corporate channels,” Brown continued.
“Our strong growth in protection sales continued, particularly in the individual sector where we wrote increased business across intermediated and direct to consumer channels alike. Portfolio growth in group protection was driven by increases in existing scheme increments and strong retention.
“We have benefited from the strong relationships we have built with our intermediary partners, including financial advisers, estate agents and other third parties. We have continued to invest for growth in these markets, focusing on our digital proposition and bringing new health and wellbeing products to market. Pricing and underwriting discipline as well as cost efficiency are key drivers for profitability in this sector.”
Overall performance
On the company’s performance overall, operating profits were up by 8% for the first half of 2023 to £715m for the period, up from £661m for the first half of 2022.
The company expected total growth of between 5% and 7% for the year.
Blanc noted that growth had been achieved against a “very challenging backdrop”.
Overall she said that Aviva had a diversified business which was resilient and had a strategy that is clearly working.
Aviva is keeping “one eye on the future” Blanc said.
“Aviva is delivering consistently strong and profitable growth. In the first half of 2023 we grew sales, operating profit and dividends for our shareholders,” Blanc continued.
“Our excellent trading momentum is a direct result of the decisions we have taken over the last three years to re-focus Aviva.
“Today, Aviva has leading positions in growing markets, providing strong resilience in the current economic climate,” she noted.
Apart from 58% growth in PMI, other Aviva sections also grew at a strong rate.
“In the UK and Ireland, general insurance premiums were up 13%, with healthy sales in both our commercial and personal lines businesses, where our Aviva Zero product has now attracted 250,000 new policies since launch,” Blanc said.
“In wealth, our market-leading workplace business grew net flows by 25%,” she added.
As a result, Blanc announced that the company had increased its interim dividend.
“Aviva’s cash and capital position is robust and, in line with our guidance, we have increased the interim dividend by 8% to 11.1p
“We expect to make further strong progress with our clear strategy, growth opportunities in all of our markets, and the £1bn investment well underway to accelerate our future performance.
“We expect to exceed our financial targets and we are making progress each quarter, as we said we would.
“I remain confident and excited that there is so much more Aviva can and will achieve.”
