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Brief Content of the Insurer

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Aviva plc is a leading general insurer in the UK market with a range of products including
motor, home, life, and health insurance. With over 18 million customers in the UK (Aviva,
2024), Aviva has a long history in the market with a great reputation for financial strength,
underwriting capability, and digital innovation. Dual-regulated by the Prudential Regulation
Authority (PRA) and the Financial Conduct Authority (FCA), Aviva's business model is based
on generating profitable growth through sustainable approaches to underwriting and risk
selection strategies. The general insurance operations of Aviva leverage strong technical
capabilities including high quality actuarial modelling, artificial intelligence use in claims, and
consideration of ESG factors in underwriting decisions. Aviva's strategic plan to 2025
includes a focus on core motor and home business growth, ongoing reductions in combined
operating ratios, and improved customer retention through segmentation and digital
platforms. The focus of this paper is on the motor insurance class at Aviva, and the impact of
distribution approaches on underwriting profitability, with some recommendations to enhance
underwriting performance in a changing and competitive marketplace.
Significance Class of Business Currently Underwritten
Motor insurance is a key part of Aviva's general insurance business, making an important
contribution to its total gross written premiums (GWP). In 2023, Aviva reported motor GWP
of around £2.1 billion, illustrating the company's scale and range within the market,
supported by a mix of direct sales, aggregator channels and broker relationships (Aviva
Annual Report, 2023). The company operates a range of differing motor products to meet
customer needs, including private car, multi-car, classic car and telematics-based products.
The range of motor insurance Variva offers enables it to target customers with different
needs, from basic coverage to more tailored products, and develop its competitive position in
a highly competitive motor insurance market.
The UK motor insurance market is currently characterized by a number of key features;
aggressive price competition, digital disruption and shifting consumer behaviours are some
of the current features of the market. Regulatory changes, primarily the Financial Conduct
Authority's ban of price walking in 2022, has impacted the pricing landscape significantly,
with insurers like Aviva having to change strategy to develop pricing and retention strategies.
Price walking has required Aviva to focus on keeping pricing competitive and sustainable,
along with a fair treatment of customers (FCA), 2023). In addition, the rising inflation of claim
costs driven by parts shortages, rising labor costs and increased complexity of repairing
electric vehicles has shifted the pressure on the underwriting margin (RUSSO, 2016). These
external factors clearly highlight the requirement for insurers to innovate to remain profitable
and agile to changes in the market
To address these issues, Aviva’s underwriting team has adopted a data-based approach to
motor risk assessment. The company utilizes sophisticated analytics, telematics data, and
behavioral analytics to improve its underwriting process and price risks more effectively. This
data-based strategy has allowed Aviva to retain a competitive advantage in a part of the
market that is being shaped by technology and consumer behaviors. An integral aspect of
this strategy has been Aviva’s investment in its QuoteMeHappy brand, as this has been a
key part of its digital transformation. By increasing the capabilities of this platform, Aviva
hopes to enhance underwriting accuracy and improve the customer journey to make it easier
for its customers to obtain quotes and manage their policies (Cochran, 2024). Aviva's
underwriting decisions are based on both claims experience to build the actuarial model and
machine learning algorithms that permit risk scoring in real-time. Aviva's use of technology
facilitates incorporation in its underwriting process to enhance risk assessment accuracy and

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improve overall underwriting profitability while simultaneously achieving customer
satisfaction.
The Current Methods of Distribution for this Class of Business
Aviva plc utilises a strategically diversified distribution model to deliver its motor insurance
products across the UK. The three primary distribution channels—direct-to-consumer (D2C),
price comparison websites (PCWs), and broker networks—are aligned with distinct
segments of the customer base and allow the insurer to optimise reach, data acquisition,
and underwriting performance. Each channel contributes uniquely to the insurer’s portfolio
and has varying implications for risk quality, expense ratios, and underwriting control.

1. Direct-to-Consumer (D2C)
Aviva's direct-to-consumer (D2C) model operates through its main corporate website and
digital platform, including the MyAviva app, and its sub-brand QuoteMeHappy to cater to a
tech-savvy and cost-conscious consumer base. D2C sales channels also have some
underwriting benefits. They allow the insurer to collect rich behavioural and transactional
data through the consumer journey, enhancing the accuracy of pricing and better portfolio
segmentation. Nicoletti (2016) states that leveraging digital insurance solutions, insurers can
facilitate seamless customer experiences while also acquiring structured and unstructured
data that can be used for underwriting and claims [Link] of the key benefits of D2C
distribution is the ability to deploy real-time rating engines and predictive analytics to
accommodate risk profile change. For example, Aviva has a telematics-based proposition,
"Aviva Drive," in which a driver's behaviour is assessed to drive renewal pricing. This is well
aligned with the progression toward younger drivers and a desire to have pricing based on
individual premium behaviours. Furthermore, D2C enables Aviva to own the customer
relationship from end-to-end, decrease reliance on an intermediary, and avoid commission
leakage. This can be positively impactful on the combined operating ratio (COR), a measure
of underwriting profitability (CII, 2025, Chapter 5A). Nevertheless, D2C entails operational
risk. Self-service models are a potential trigger for data accuracy concerns, particularly
where customer-driven information is unverifiable (Cochran, 2024). The reliability of the
opportunity for underwriting is shaped entirely by the accuracy of information provided; and
without a broker in the process, the potential for non-disclosure and misrepresentation may
compound. Thus, Aviva will need to invest in the digital verification of information provided,
fraud detection etc., in support of this channel.

2. Price Comparison Websites (PCWs)

PCWs have established themselves as a dominant force in the UK motor insurance
distribution channel, with over 70% of policies being initiated via an aggregator in recent
years (Statista, 2023). Aviva participates on all major PCWs - including CompareTheMarket,
[Link], and MoneySuperMarket - under its own brand and via [Link]
provide high visibility and traffic, giving Aviva access to a considerable volume of quote
requests, thus creating an opportunity for new customer acquisition. However, it is important
to note that entering into this channel can be extremely price-sensitive and creates unique
opportunities for underwriters. Customers are rarely familiar with the brand prior to
purchasing and the decision to buy is normally based on the headlined price rather than
coverage offered or customer service ratings. As Boobier (2016) suggests, the
commoditisation of insurance products means that this type of distribution limits the ability of
an insurer to differentiate themselves from their competitors and having bid prices, focused
on the business case metrics of algorithmic accuracy and quote competitiveness, is the only
way to convert customers to purchase.

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Aviva maintains a competitive edge in the pricing of its PCWs by employing automated
pricing engines and daily programmed monitoring for rate changes, taking in a stream of
information from internal data (for example, claims frequency, average claim costs), and
external market activity to determine price (Insurance POST, 2023). With the combination of
automated pricing capabilities, Aviva can rapidly deploy repricing considerations and
dynamic pricing strategies for margin optimization along with ways to segment customers
based on the associated acquisition costs and anticipated customer lifetime value. Aviva
needs to manage adverse selection and possible fraud risk from high volume aggregators,
while they approach this risk factor with fraud scoring in their quote-and-buy journeys, along
with validation post-bind routines. While PCWs do support volume scale, higher expense
ratios can often result from aggregator fees and churn from acquisition. For reference use
only, even if PCWs have a positive impact on top line revenue, you want to be cautious of
how they impact your core underwriting profitability.
3. Broker Networks
Aviva actively works with many brokers and intermediaries to distribute motor insurance
products, particularly in some more complex or commercial niche areas such as fleet
insurance, chauffeur insurance, or motor trade insurance. This involves larger regional
brokers, along with participation in major broker panels, for example, Brokerbility or Willis
towers Watson Networks. Broker distribution remains important to Aviva’s strategy,
particularly in lines of business where customised underwriting, risk consultations and
relationship management are the primary requirements. Brokers present Aviva with tailored
risk submissions, additional detail on proposers, and ongoing conversations during the policy
life cycle (Swift, 2025). The management of delegated authority relationships requires an
appropriate governance and control framework. Aviva utilises audit schedules, KPI items on
performance, and limits on underwriting authority, to manage broker activity and maintain
compliance. Inadequate oversight can result in leakage, inconsistent risk selection or
breaches of regulations; risks that Aviva have processes around from its specialist
relationship management teams and broker onboarding due diligence processes.
How Adding or Amending One Method of Distribution for this Class of Business
Could Influence Underwriting Profitability.
Having evaluated Aviva's current distribution strategy in relation to motor insurance, it is
clear that each channel has provided distinct advantages; however, changes to adjusting the
Price Comparison Website (PCW) channel could most directly affect underwriting
profitability. More specifically, amending Aviva's aggregator strategy and offering a separate
product designed specifically for PCWs targeted at mid-net-worth customers and improving
data inputs from underwriting could enhance risk selection and provide operational savings.
The Case of Change
Price comparison websites have been an effective growth engine for Aviva's motor
insurance business; however, they have also contributed to margin compression, churn, and
a disproportionate number of price-driven customers. As Cochran (2024) states, Price
comparison websites will reward the lowest visible premium, potentially limiting accurate risk
pricing and long-term customer retention. In addition, Aviva's data indicates that customers
who have been acquired via aggregators switch their policies more frequently than those
acquired through other channels, which increases acquisition costs and has a negative long-
term effect on customer lifetime value. To improve underwriting profitability, a strategic
adjustment has been suggested to the existing approach utilized on the PCW channel:
distinctively segmenting Aviva's presence on PCWs with a custom offered product

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developed in mind to target mid-net worth customers who are looking for value, flexibility and
quality rather than the lowest price (Swift, 2025). This would remove a one-size fits all pricing
structure into a dual tier pricing model. For example, the insurer could maintain its presence
via QuoteMeHappy for commoditised, price-sensitive buyers, while launching a tailored
motor product under the Aviva brand with coverage features, limits, and services appealing
to higher-value segments—such as enhanced courtesy car cover, lower excesses, or green
repair services.
Impact of Risk Selection and Loss Ratios
By focusing on mid-net-worth consumers- who typically own newer, high-value vehicles, and
drive lower mileage- Aviva can tap into a market that has a lower risk profile and ultimately
improve the overall loss-ratio of the portfolio. According to Parodi (2023), risk-based
segmentation in pricing allows insurers to deploy their capital in a more strategic manner
while significantly improving their ability to project expected claims costs. Hand-in-hand with
reduced risk level, mid-net-worth consumers are less likely to "game" the quote process thus
generating higher-quality and more reliable rating data. This change will also improve the
quality of the disclosures collected during underwriting thus reducing the potential for claim
disputes and risk of mis-pricing the product with incorrect or misleading client information. If
designed properly, Aviva will have the option of utilizing eligibility filters and underwriting
product structure to pre-screen higher-quality risks and place less-quality risks in channels
that are not capital intensive or to simply turn them down.
Increasing Customer Lifetime Value and Retention
Another advantage of developing the PCW strategy is the ability to potentially increase
policyholder retention and value to the bottom line. Customers entering mid-net-worth
products tend to have a lower propensity to switch insurers on a yearly basis, particularly
once the perceived value proposition included service, optional add-ons, and claims
response times. Aviva can assist with this by providing loyalty incentives, bundling polices,
and using the MyAviva platform as an ongoing digital engagement source. Also, FCA (2023)
guidance on Consumer Duty requires insurers to show customers are receiving fair value
over a time period, therefore this would be aligned with regulatory requirements, especially
for higher-risk groups or vulnerable customers.
Recommendations to Optimise the Underwriting Profitability for this Class of
Business.
In accordance to the analysis of Aviva motor insurance distribution strategy, the following
strategies are recommended for optimizing the underwriting profitability. Each proposed
recommendations, when implemented effectively, would effectively improve risk selection,
bolster operational efficiencies, and optimize underwriting strategy within the context of
regulatory frameworks and market dynamics. Aviva will only be able to achieve the
commercial balance between sustainable underwriting profitability, evolving customer needs
and regulatory expectations set out by IMS if these recommendations are observed.
To begin with, Aviva should put into action a two-brand plan within PCWs. They should keep
using QuoteMeHappy for customers who care a lot about price. At the same time, they
should launch a mid-range motor insurance product under the main Aviva brand. This plan
matches what works well in other fields like retail banking and phone companies. In these
fields, brands are split up to serve different customer groups based on how much profit they
bring (Boobier 2016). By using this plan, Aviva can aim better at different types of
customers. QuoteMeHappy can focus on basic cover and higher excess choices for people
who want to save money. The Aviva brand can offer more complete cover options, like help

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if your car breaks down keeping your no-claims discount safe, and extra cover if you get
hurt. This split-up plan will let Aviva's risk experts focus on risks that don't happen often and
aren't too bad. This can cut down on big changes in claims, make customers stay longer,
and in the end, make the ratio of costs to income better. This approach will also boost the
return on money put in. It makes sure that Aviva's products fit better with the different needs
and risk types of its many kinds of customers (Parodi 2023; CII 2025 Chapter 5G).
Similarly, Aviva should further increase its data enrichment in order to price risk better at the
point of sale on Price Comparison Websites (PCWs). By linking in more data sources such
as DVLA vehicle history and MOT records, credit scoring and ID validation services, right
through to telematics-derived behavioral scores for renewal pricing Aviva can improve their
accuracy on risk assessment. Equipped with this more robust set of data, the company will
be able to obtain lower rates and faster service at a time of quoting and help identify bad
risks that need fast attention (Boobier, 2016). For example, write up should only accept
profitable low risk business while high-risk customers need to be aptly priced or removed all
together from the quote process. Leveraging third party datasets to enhance the
underwriting process not only leads to better risk management, but also helps Aviva in their
journey towards a more agile and contemporary approach for underwriting. Not only does
this ensures that the pricing integrity remains real-time, but also enables a rapid response to
market changes and gain better control over their overall risk exposure (Cochran, 2024).
In addition, Aviva should refine its underwriting governance framework in order to manage
the complexity of multi-channel distribution. As policies are sold through multiple channels
such as PCWs, Brokers and the Direct business it has been critical for Aviva to put robust
KPI measurement in place across all of these. This will involve tracking QV, conversion
rates and quotes bind by post coded/day across Vehicle Groups and demographics, that is,
age bands. Moreover, it is important to track rating changes in audit trails for compliance
with FCA Pricing Practices Market Study (PPMS) and by extension other regulatory
obligations. This is where predictive analytics have a key role; because the tool can predict
the future impact of rate changes before, they are applied, Aviva will be able to experience
with pricing adjustments in what would appear as "sandbox testing." Being able to respond
rapidly to new patterns arising and regulatory requirements improve Aviva´s capability of
managing its pricing risk efficiently with this level of monitoring and predictive analysis. All of
this will not just ensure that the price integrity is upheld, but to cover off obligations under the
FCA-imposed Consumer Duty (FCA 2023), mitigating potential regulatory interference and
avoid any market mis-steps.
Moreover, to drive further operational underwriting efficiency and hence profitability as an
insurer in the UK market, Aviva should invest in artificial intelligent (AI) powered claims
handling systems to make the process more efficient and detect fraud. Anomaly detection
models can be employed to flag suspicious claims through AI technologies, photo-based
triage is using advanced tools like computer vision- estimating costs for repairs and
segmenting the type of claims according to severity so low-risk one’s filter directly into fast-
track paths. This enables Aviva to model the most optimal claims journey, leading to a
reduction in cycle times and indemnity spend. Cochran (2024) argues that claims analytics
have a critical part in this because the ability to detect fraudulent activity early, can reduce
claims expense and further benefit result achieving cost savings due to expensive claim
events being reduced. Aviva can also save on administration costs by investing in such AI-
powered systems, making its operations more cost-effective and higher-margin contributing
directly to underwriting profitability (CII, 2025[Chapter 6 C]). Moreover, these same
technologies enable us to foresee more accurately what may lie ahead in terms of claims

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trends so we can exercise better RM and keep the company on top as a loss prevention-
minded organization.
Finally, Aviva should also give considerable attention to improving governance of its broker
channels and delegated authority oversight at Aviva. While the aggregator space will remain
a key area for Aviva, broker partnerships are still paramount when it comes to commercial
motor risks such as fleet chauffeur and taxi policies. In relation to this channel, delegated
authority arrangements should still be audited using a central compliance model so as not
let underwriting discipline slip (Cochran, 2024). In turn, this will make sure brokers stick to
underwriting standards and that any adjustments in the risk characteristics of their book are
responded to swiftly. Performance reporting such as claims frequency, quote-to-bind ratios
and average premium per broker- is delivered on a regular basis to ensure clear visibility of
the health of your relationships with brokers and financial reports. In addition, the
scorecards serve as a means of ranking the profitability by broker and managing capacity in
line with ensuring that brokers with higher profitability are given more capacity whenever
there is pressure on what to write where others can be squeezed so that it ensures portfolio
balance. This will safeguard that the business continues to deploy risk appetites in a
uniformed approach, both from the direct and broker channels as this is necessary for
underwriting profitability and longevity (CII 2025) Chapter 9I.

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Reference List
Aviva plc, 2023. Annual report 2023. [online] Available at:
[Link]
Aviva, 2024. About us. [online] Available at: [Link]
Boobier, T., 2016. Analytics for insurance: The real business of Big Data. John Wiley & Sons.
Chaplin, R. A., 2025. Policy Updates From the UK Prudential Regulation Authority. Skadden
Publication . [Link]
from-the-uk-prudential-regulation-authority
Chartered Insurance Institute (CII), 2025. CII study text 2025. London: Chartered Insurance
Institute. [Link]
Cochran, L. (2024). Advance Underwriting. Chartered Insurance Institute.
Financial Conduct Authority (FCA), 2023. Consumer Duty. [online] Available at:
[Link]
Hellerstein, J.M., Heer, J. and Kandel, S., 2018. Self-Service Data Preparation: Research to
Practice. IEEE Data Eng. Bull., 41(2), pp.23-34.
Insurance POST, 2023. Claims inflation and PCW fraud vulnerabilities. [online] Available at:
[Link]
Nicoletti, B., 2016. Digital insurance: Business innovation in the post-crisis era. Springer.
Parodi, P., 2023. Pricing in general insurance. Chapman and Hall/CRC.
RUSSO, C., 2016. The Ethics of Banking and Financial Regulatory Authorities: a study of the
Bank of England, the Prudential Regulation Authority, the Monetary Policy Committee
and the Financial Conduct Authority.
Statista. (2025, April 8). Topic: Motor insurance in the
UK. [Link]
Swift, J. (2025, February 4). Eight key takeaways from post’s motor insurance profitability
roundtable. Insurance
Post. [Link]
from-posts-motor-insurance-profitability-roundtable

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Glossary of key words

Analyse
Find the relevant facts and examine these in depth. Examine the relationship between
various facts and make conclusions or recommendations.
Construct
To build or make something; construct a table.
Describe
Give an account in words (someone or something) including all relevant characteristics,
qualities or events.
Devise
To plan or create a method, procedure or system.
Discuss
To consider something in detail; examining the different ideas and opinions about
something, for example to weigh up alternative views.
Evaluate
Make an appraisal of the worth of something.
Explain
To make something clear and easy to understand with reasoning and/or justification.
Identify
Recognise and name.
Justify
Support an argument or conclusion. Prove or show grounds for a decision.
Outline
Give a general description briefly showing the essential features.
Recommend with reasons
Provide reasons in favour.
State
Express main points in brief, clear form.

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