Canadian Underwriter

A Winning Game Plan

December 23, 2013   by Regan Reid

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Greg Somerville will be the first to tell you that he’s highly competitive. But he won’t be the last. His colleagues say that the newly appointed president and CEO of Aviva Canada has always been extremely focused on “the score.” How do the company’s results compare to last year’s results? How do they compare to the company’s plan? And especially, how does the company compare to its competitors? (Aviva Canada remains the second largest property and casualty insurer in Canada, based on net premiums written, after market behemoth Intact Financial.)

“Some people compete and they’re afraid to lose. But with Greg, it is more [about] the joy of the win,” explains Joe Vachon, executive director, national commercial lines and Ontario GTA at Aviva Canada. One person Somerville is more than happy to compete with is his predecessor, Maurice Tulloch, who was appointed CEO of Aviva UK & Ireland General Insurance in September. “No doubt there will be a little healthy competition in connection with whose business is performing better,” Somerville says seriously, with a hint of a smile. “We’ve already started those conversations.”

The announcement that Tulloch would be leaving Aviva Canada took the industry by surprise. Almost as soon as the official press release was out, it seemed, the always outspoken and energetic Tulloch was on a plane to the UK to begin his new career. Less than one month after Tulloch’s appointment, it was announced that Somerville, who had been leading Aviva Canada since Tulloch’s departure, would officially become president and CEO. “I’m delighted to be given the opportunity. It’s a great company; it’s got a tremendous management team, and a dedicated group of employees who understand what our strategy is and what our objectives are,” he says. Somerville is incredibly focused on Aviva’s long-term game plan and stresses that, though the company has recently gone through a transition, its partners can expect continued success under his leadership. “There’s continuity in me leading the business,” he says. “There’s nothing foreign about what we’re trying to accomplish here.”

Smooth Transition

Somerville entered the insurance industry fresh out of university in 1979. He began his career as a road adjuster with Liberty Mutual Insurance Company before moving to State Farm for 10 years. “Both companies were instrumental in cementing in my [mind] the value and importance of the fundamentals of general insurance. Both companies were excellent training organizations from a technical perspective and an entry-level management perspective,” he says. In 1991, he became director of the consumer benefits department at Prudential Assurance, which was soon purchased by General Accident Assurance, a heritage company of what is now Aviva Canada. Somerville has held senior leadership positions since joining Prudential, and (after a series of mergers and acquisitions that brought him into the Aviva family) has been a member of Aviva’s executive committee since 2004. In 2010, Somerville was appointed executive vice-president of broker distribution, sales and marketing in Canada.

Somerville and Tulloch worked very closely together at Aviva as they rose through the corporate ranks. Prior to being named president and CEO in 2009, Tulloch was executive vice-president, broker distribution for Ontario, while Somerville managed the business for the rest of the country. “We basically co-led the business, and it worked because we had a tremendous amount of respect for each other. And for it to be effective, it required a lot of collaboration between the two of us, which came natural to us,” he says. Together, the two worked to grow the business and develop strong relationships with the broker community. “One hundred percent of our business was managed through independent brokers, so it was really about driving the performance of our business, understanding the value and importance of relationships, understanding that brokers have choices, and respecting that they have choices. For us, to win their support, we had to continue to prove the value of them placing business, and putting their clients, with Aviva. Those are visions that he and I shared.” And that Somerville will continue in his new role going forward.

I’m not certain that a customer decides to purchase insurance and makes a decision to either go to a broker or go direct. They make a decision as to how they want to buy the product.”

Focused on Fundamentals

Somerville discusses Aviva’s business plan in the straightforward, systematic manner in which a coach might discuss his team’s strategy for the upcoming season. By focusing on the fundamentals, he says, Aviva will come out on top. “Winning companies have a tireless dedication to the execution of the fundamentals of general insurance, which is managing distribution, pricing, underwriting, risk selection, claims adjudication and expense[s],” he explains. “That’s the journey we’re on, and that’s the journey we’re going to continue to be on.” To win, the company will continue to concentrate on what Somerville calls the two pillars of general insurance: underwriting and distribution.

On the underwriting side, Aviva Canada launched a “transformational program” in 2009 to improve its personal lines business. Leveraging its successes from that program, Aviva is now concentrating on the commercial side of its business. The company is focusing on using new technologies, such as predictive analytics, to apply more actuarially sound pricing into its products. “It’s about improving our service proposition in commercial lines, enhancing our ease of doing business for brokers … and ensuring that we have sound pricing in our products,” he explains. “So, how do we support our underwriters in a different way, with tools and technology to facilitate the underwriting decisions that we’re making on behalf of Aviva?”

On the distribution side, Somerville remains fully committed to strengthening and growing the broker channel. “Greg [is] very focused on finding solutions for the broker channel to compete with the direct [writers] and win customers back to the broker channel,” says Aviva’s Vachon. In his previous role as executive vice-president of broker distribution, sales and marketing, Somerville would travel across the country every fall giving brokers updates on Aviva’s results and strategy. One of the goals of these forums, explains Somerville, was to spark discussion and find broker solutions that respect consumer preference. “I’m not certain that a customer decides to purchase insurance and makes a decision to either go to a broker or go direct. They make a decision as to how they want to buy the product. It may be picking up their iPad and searching for insurance at a time and place that’s convenient for them. I don’t think that precludes brokers from that conversation,” says Somerville. “Customer preference could end up being direct, if they found a direct proposition the way they wanted to be served, but it could be for a broker if they found a broker proposition the way they wanted to be served. And that’s the conversation that we’ve been provoking at Aviva. And those are the kinds of solutions we’ve been looking to invest in.” Aviva’s website, for example, allows consumers to obtain home and auto insurance quotes online, which are then provided to brokers who can reach out to the consumer and complete the sale.

Buying In

Aviva’s support of the broker community also includes financially supporting brokerage owners looking to exit the business. The company has made capital available to principals to fund their succession plan, largely in the form of debt financing. But Somerville says the insurer has recently considered minority equity positions in brokerages as a means of safeguarding its investment in the independent broker channel. “Broadly speaking, [equity financing] gives us more comfort that we can protect not only our business, but the business that’s written by the broker in the independent broker channel. [Otherwise], debt could be paid off and the broker could be sold and integrated into a Johnson’s or another model,” explains Somerville. Some in the broker community, however, have argued that insurance company ownership of brokerages—partial or otherwise—undermines the independence of the channel. “I’ve never had that levied at us,” responds Somerville. “We leave the operations of the brokerage to the people we’ve invested in, and it’s never been our strategy to control and influence independent brokers.” He adds that when a consumer goes to an independent broker, it is essential that they have options presented to them. “That’s been critically important to us in all of the transactions we’re involved in. We expect the people we do business with to remain independent, and to respect what consumers have the right to look for when they approach an independent broker. It’s never been about us trying to control them.”

Dan Danyluk, chief executive officer of the Insurance Brokers Association of Canada, says Aviva has always been forthcoming in its intentions when purchasing brokerages. “They’ve always said it hasn’t been their desire to own brokerages. When they have come forward to purchase a brokerage, for the most part, it’s been on the basis that they’re warehousing an asset until brokers can take it over,” he says. “They’ve taken a position that they want to be supportive but not intrusive in the broker industry.”

Bumps in the Road

It’s clear that Somerville whole-heartedly believes that in order to be successful—to win—Aviva must focus on the broker channel and sound underwriting practices. But there are issues in the industry that present obstacles to that strategy, the mandated Ontario auto insurance rate cut being one of them. Somerville is currently chair of the Insurance Bureau of Canada’s (IBC) Ontario committee, which, among other things, examines Ontario auto. Though Tulloch flew back to Toronto to participate in the Insurance Brokers Association of Ontario Convention CEO Panel in October, Somerville could have easily spoken just as passionately on the topic. “We’ve been asked to take down costs on a promise. What we need to see is some meaningful actions taken to reform the product so that the cost can be taken out and we have a sustainably priced product based on the fact that we’ve been able to reduce premiums, because costs have come out of the system,” he says. Ralph Palumbo, vice-president, Ontario for the IBC, has worked extensively with Somerville on the committee. “The thing that I like about Greg and that I really respect about him is that he doesn’t have the same old [approach] … he doesn’t want to look at the same old solutions to problems that have been around in Ontario auto forever,” says Palumbo. “He’s adamant that the tweaking has to stop. He wants to look at a longer-term overhaul of the product that will bring some affordability to consumers, stability to the product, and sustainability in the sense that companies can actually stay in business.”

Somerville’s approach to Ontario auto is just one example of his commitment to the long game. No matter how far away the goal line is, it’s clear Somerville is ready to compete.


Copyright 2013 Rogers Publishing Ltd. This article first appeared in the December 2013 edition of Canadian Insurance Top Broker magazine

This story was originally published by Canadian Insurance Top Broker.