Norwich Union has taken the brave step of being the first insurer to raise premiums, but is the brand strong enough to keep customers on board? asks Catherine Turner
When Norwich Union (NU) announced last week that it was hiking the prices of its motor insurance because of rising repair and medical costs, it caused commentators and consumers to bastardise the insurer’s advertising slogan. As Lucian Camp, chairman of financial services specialist agency cchm:ping, says: “Norwich Union has broken the logjam. But now people are joking that rather than its slogan being ‘Quote Me Happy’ it should be ‘Quote me Unhappy’.”
The price rise came hot on the heels of the launch of a cheaper, Web-only “stripped down” policy, Simple Cover, and followed assertions from NU general insurance marketing director Shaun Meadows that prices across the industry would have to rise after years of aggressive acquisition strategies (MW last week). It is the biggest increase seen in the industry since 2001. As yet, NU remains the only major insurer to raise premiums despite similar warnings from elsewhere in the industry. In December, Royal & SunAlliance-owned MoreThan slammed rivals for their “obsession with price” (MW December 8, 2005).
Yet NU, owned by global insurance giant Aviva, surely believes it can outride these woes, relying on its heritage, loyalty to a trusted brand and a strategy that enthuses insurance is “worth paying for”.
Certainly bosses at Aviva, created by a merger of NU and Commercial & General Union (CGU), are confident that the NU brand is too strong to destroy in the UK, despite most of its international business operating under the Aviva moniker.
Meadows, who also heads marketing for the RAC brand, bought by Aviva earlier this year, says: “We want to position having motor or home insurance as a good thing. If the reason that people are buying policies is simply because they are cheap, it destroys all the value that we are working for.
“NU wants to be the home of home insurance. We want to stand out in the market.”
He says there is no intention of rebranding the UK businesses as Aviva, although the corporate name is increasingly visible. Yet he admits the sprawling UK business, which covers life and pensions as well as general insurance, brings its challenges.
“The brand has to cover every product from motor insurance and travel insurance to ISAs and group pensions,” says Meadows, who was promoted to the group insurance role earlier this year. “It must work from the individual in the street right up to corporate propositions. It must be available through the telephone and the Web through to brokers. It has to play to all companies, but also needs to be good in front of corporate partners. That is the challenge.
“We are trying to work out what the brand needs to look like and its link to Aviva, which is a good consumer brand in some countries. How do we link all that together? Watch this space.”
Camp believes NU’s size, the spread of its businesses and its evolution as a series of mergers, have hindered the company from leveraging brand equity. He says NU, despite being more than 200 years old, has little of the brand equity enjoyed by rivals and says that it might as well be Aviva in the UK, as elsewhere. “In the great scheme of things, would it matter if NU became Aviva as the global brand?” he asks.
“I don’t think NU stands for anything. Apart, perhaps, from being big. It has been one of the most inconsistent financial services brands in terms of its communications and as such it is very hard for consumers to get a handle on what it stands for.”
However, Interbrand managing director Graham Hale believes there is mileage in the NU brand, and says he expects the company to keep it as a consumer-facing brand while leveraging Aviva in corporate markets. “It is sensible to retain the locality with a brand as strong as NU,” says Hale.
He says NU, through its “happy” positioning, is making progress and has become a brand that would be a definite option to consider when searching for insurance, but thinks it has a way to go until the call-centre experience matches the promise.
More importantly will be how NU manages to appeal to consumers after being the first insurer to push up motor premiums, says Hale.
However, with the launch of Simple Cover, innovative pilots such as “Pay as you drive”, which lets consumers cut costs by detailing when and how much they travel, as well as a big push to become the “home of home insurance”, the brand will want to prove it is a modern brand, built on a rich and loyal heritage.