As the second largest player in the indvidual protection market, you could be forgiven for thinking Aviva would take the typical insurer’s conservative approach to protection. So what was HI Daily columnist Tony Levene doing at the provider’s insurer’s Digital Garage in hipster Hoxton in London? He was meeting Paul Brencher (pictured), the new MD of individual protection at the insurer to find out more about his plans for the future
My interview with Paul Brencher, the recently appointed managing director of Aviva Individual Protection – hence one of two or three most important people to those working in this space – was booked in at the Aviva Digital Garage rather than the insurer’s traditional City office.
It’s in hipster Hoxton in central London. There’s no Aviva branding on the outside, and getting even through the front door involves heavy interrogation from a phalanx of security guards. One suggestion is that this is necessary to keep out those who think it is a club or restaurant.
You don’t get the normal visitor badge to wear. Instead it’s a wristband in Aviva yellow – which means you don’t get the customary stuff about health and safety. But there is no all-day free food or off the wall furniture in the garage – both staples of hip Hoxton.
Opened in mid-2015, the building is meant to display a forward looking Aviva. Merseysider Brencher jokes that he was surprised to be let in wearing a suit and tie agrees that insurance is stuck in the past – although he’s not sure how many decades that involves.
Brencher, aged 45, married with two daughters and a son, started working life at accountants PwC. After 12 years there, he moved to Danish butter and cheese co-operative Arla.
He reminisces: “It was the real world. You learnt to work with those who had other disciplines, and with the Danes, other cultures. But it was still financial although it was planning and strategy and a move away from bean-counting.”
He joined Aviva in 2007.
“I wanted a role in an organisation with a purpose. I wanted to help people through bad times,” he says.
He has some family history in this. As a child in Liverpool, his father contracted cancer, putting the bread-winning onus onto his mother. His father got better but it was tough on the money front. Eventually his mother trained to become a protection adviser.
“In joining Aviva,” he says “I wanted to help people like my mum, hopefully not having to go through what she did.”
After more than three years “living out of a suitcase, running the finances of Aviva Europe” (Aviva’s idea of Europe includes India for some reason), and gaining insights on how insurance worked, he was promoted to his present post in September this year.
“I wanted to be back in the UK, I had an interest in protection so it was toss-up, according to my bosses, between long-term protection and health,” he continues. “I could have gone either way but I went for protection.”
Aviva is number two in the market after Legal & General. He accepts that the industry as a whole has small growth at best and is stagnant at worst.
“We need to acknowledge this and start off with ways to avoid going backwards,” he says.
But because he did not come into insurance via the traditional route, he sees the business differently.
“The insurance industry does not often view itself as others do. It digs its heels in too much and then ends up with regulation that may be tougher than if it had compromised early on,” he says.
He is clear that the protection industry needs a far more nuanced debate on genetics and big data
“There are real questions of ‘how much’, especially if you add to these, advances that we don’t even know about. If we use all of the data all of the time, is it still insurance?” he sasks. “Should we be pooling risks or moving towards a situation where one group is left feeling they have no use for cover because the data will favour them while a second group remains uninsured because the data will price them out of the market? We need a broad debate on pooling versus specific risk to ensure there will still be a market out there.”
“Is it morally right to leave a section of society uninsured?” he continues. “We have to be transparent.”
He believes the Association of British Insurers is the best forum for dealing with the industry’s future. He regrets the Legal & General decision to quit.
“It would be helpful if everyone was in the ABI,” he says. “The absence of a major player does not help.”
Besides genetics and big data, there are many other aspects where the industry has to engage – preferably speaking with one voice.
“We need to look at what will replace the Money Advice Service, work out how we stand on automated advice – direct is only 10% now but will how many millennials will want a traditional face-to-face adviser?” he says. “And we need new thinking on nudges and rules of thumb. The industry shies away from generic statements – maybe we can use the Financial Advice Market Review report here.”
He cautions competitors and others against “chasing low probability” outcomes.
“Yes, protection should be a required part of the mortgage conversation,” he says. “But cover should not and could not be made compulsory as some wish. The government won’t do it so what’s the point of pursuing something that will not happen? In any case, the growth of renting means we can no longer rely on home loans to sell policies.”
Brencher is in favour of commission and sees a “protection RDR [Retail Distribution Review]” as “firmly off the agenda”.
“Commission has its place but it has to be transparent,” he says. “We need to ask what is fair value, is the payment evenly apportioned between all those involved? I don’t currently know the answer but I am engaging closely with networks and others. The winner in the UK will be seen to be acting in the best interests of policyholders and advisers. It’s getting the balance right.”
He agrees that the protection gap, while obviously existing, is impossible to measure – a sort of length of a piece of string question.
“So if there is a gap, why aren’t we making inroads?” he asks. “We have to challenge everything we do while not ripping everything up. Intergenerational living and generation rent mean we can’t assume protection needs remain as they were three or four decades ago.
“People expect one-click purchasing. And we are far from that, perhaps because we are scared of the potential competition consequences of working together. We should be on a journey, not retrenching. So where’s the live discussion on how to make the protection purchasing process easier? Customers get fed up and spend their money elsewhere. Advisers waste time. The doctors on whom we rely for so much, are mostly still stuck with antiquated methods. And we remain really bad at capturing those moving off a group scheme when they change employment.”
So why a self-confessed bean counter rather than a dyed in the wool insurance person?
“As a self-confessed sometime bean counter, I’m not a protection expert,” he acknowledges. “But I am prepared to look at the problem, listen to and work with experts until we find the right way forward to move to new ways. More parochially, the Digital Garage gives us the right environment to attract the right people by looking outside the traditional insurance industry.”
To use a non-insurance expression, Brencher is taking on a tough gig. Will he fill in the protection gap (whatever that is)?
Leaving the Digital Garage, I am reminded that one of the creators of the Tour of Duty video game now works for Aviva. At least, he will know something about body count. And that could be crucial in protection.
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Career Biography: Paul Brencher, managing director of Individual Protection, Aviva
Paul Brencher received his degree at the University of Sussex before qualifying at the Institute of Chartered Accountants in England and Wales.
After spells at PwC and Arla UK Foods, he joined Aviva in 2007 where he has held a number of roles including head of finance, planning and business partnering and more recently as chief financial officer of Europe from March 2015.
He was appointed managing director of individual protection at Aviva in August 2016.