Snake oil won’t insure we still put our trust in Aviva

Simon English
13 Jan 2009

Meet Bill Smith. Bill has been selling insurance for longer than anyone can remember to at least half the inhabitants of AnyTown. A reassuringly dull man, Bill is always the most boring person in the room unless he happens to be at the birthday party of one of his actuary friends — and even then it's close.

Cautious to the point of obsession, he harrumphed at rising house prices and shrugged when they fell — he had seen it all before. He was deeply suspicious of new fads and of the language of marketers. Bill enjoyed one sherry on New Year's Eve and wondered if this was an indulgence too far.

But something weird has just happened. Bill Smith — of all people — has had an extreme makeover. He is changing his name to Bruce Feelgood, and has taken to hanging out with musicians and models. His loyal customers are worried, and many are taking their business elsewhere.

Bill's tale is a warning for Norwich Union, except I fear it is too late.

The company is spending many millions to change its name to Aviva (the name already existed corporately, and as a brand overseas) and has hired famous name-changers Bruce Willis, Alice Cooper, Elle MacPherson and Ringo Starr to promote this through blanket TV ads.

Changing your name allows you to be who you always wanted to be, says the ad, which suggests Norwich Union wants to be a Hollywood actor, a man who dresses as a woman and plays with snakes, a woman who is famous only for her looks or the second-best drummer in the Beatles.

None of this makes sense.

The point of insurers is that they don't have identity crises — they do exactly the same thing in perpetuity. Norwich Union has been around since the 1600s, which suggests it knows what it is doing — its longevity alone stands for something.

Aviva, which sounds like a bus company or perhaps a new shampoo, has been around for five minutes, and it stands for nothing.

The company says the name change will give it “global impact”. Even the marketing people don't know what this means. Sales ought to rise as an era of prudence where saving is fashionable takes hold, but it won't have anything to do with the rebranding.

Norwich Union was already the perfect name for the company — one whose image was aligned with the middle-class, middle-England values of most of its customers. This was more than just branding — it was in touch with reality.

As catastrophic floods swept across Britain in 2007, Norwich Union was brilliant. It insured one in five of the affected homes and moved quickly, doubling the staff on hand to deal with claims, ordering in specialist drying equipment and sending busloads of experts into the troubled areas to offer help. Don't worry, it seemed to be saying to its panicking policyholders: we've got you.

If the insurer wanted to do a marketing push, why not make this the basis of the campaign? Instead it has aligned itself with celebrities — a bull-market move at a time when prudence is called for.

I have a Norwich Union savings product. It is one of those utterly incomprehensible deals that the insurance industry specialises in, but the nuts and bolts are these: I pay in £20 a month for 25 years and at the end I get back a tiny portion of the premiums paid — that's if I'm lucky. If I'm unlucky and I get a critical illness, the scheme pays off the mortgage so I have somewhere to live while I deal with my sickness.

I've no idea if this is good value on an actuarial basis, but it feels like it is.

When buying insurance, only two issues really matter: how much does it cost, and will the company I am buying it off still be there when I need to collect? Companies that don't waste
£10 million on unnecessary rebranding campaigns are likely to offer lower rates and survive longer.

Tesco blunders' may be just a feinting fit

Is Tesco wobbling? It's fashionable to say so, but I don't buy it and today's sales numbers don't really make the case.

Retail-watchers have been looking for the beast of the supermarkets sector to stumble for years, and some reckon its recent introduction of a range of discount brands that cannibalise other sales are evidence.

“The first big mistake Tesco has made in a decade,” said someone at Planet Retail — unless you count all the other big mistakes Tesco has supposedly made in the last few years, which turned out to be nothing of the sort.

Chief executive Sir Terry Leahy's most recent blunder was the march into America. Actually, the numbers suggest this venture is doing fine, but may just take a little longer properly to catch on.

If Tesco's UK market share has dropped, it won't be by much, and it could even be intentional — to show others have discounted too much, and are selling some goods at a loss.

From a political point of view, it's also helpful for Tesco to look as if it is on the slide. The Government is still sniffing around the notion the supermarket industry may not be competitive (laughable) and that Tesco has too much power for the public good (reasonable).

If Tesco can make it look like it has suffered a plunge in its fortunes, that it is currently struggling to keep pace with a newly energised J Sainsbury and a feisty Asda, that should keep the competition plods out of its way for a while longer.

Then it can return next year with record profits and do what it always does — blow rivals out of the water.

Vampires slain, but the taxman's still lurking

It's that time of year when the authorities send menacing letters warning that I will be banned as a company director.

My position as chairman, chief executive and treasurer of the Portland Rise Property Company is under regular threat because I always forget to file a tax return for what the Inland Revenue imagines is a sprawling empire.

Like Terry Venables and Robert Maxwell before me, I may not be fit to continue at the helm of a Ltd outfit, says the taxman.

Prompted by these threats, I annually send the Revenue a return which reads like this: Income £0, Outgoings £0, Profit/Loss £0. Oh, and a cheque for £30 to cover Companies House expenses.

The PRPC holds one asset: the freehold, the bit of land on which my house sits.

One of the few genuinely brilliant pieces of legislation brought in by New Labour was the right to buy up your freehold from the beastly landowners that charge many homeowners in London “management” fees and other types of extortion.

For a market rate, I think it was about £10,000 in my case, you are able to rid your life of these vampires. They don't like it much when you do, which is an added bonus.

Presumably I'm one of many thousands of Londoners who have done this and has to go through this tax charade each year.

Perhaps the civil servant who processes this piece of bureaucracy has me as a corporate fat cat — one who hides his assets offshore in between flights on private jets.

One year, he thinks, I will slip up and he'll finally get justice…