The consultancy says it has decided against block switches, despite offers from big insurers to do so, because it wants to negotiate the best terms for each of its clients.
Several providers have offered to take Aegon business en bloc, either on the same terms as Aegon had offered, or in some cases with a discount on the Aegon terms.
Jamie Winter, practice leader, UK healthcare and risk consulting at Watson Wyatt says despite offers, it will treat each case on its own merits.
But Andy Stephenson, group risk national sales manager at Aviva argues there are situations where a bulk deal can be in the best interests of all firms because economies of scale can mean all parties are better off than underwriting each case individually.
Winter says: “We have had offers from leading insurers saying they will support us in a block switch of the Aegon book. But we think we cannot do this because it does not sit well with treating customers fairly. By taking such an approach you might be subsidising your bad risks and penalising your good risks, which would not be fair on them.
“We have not seen leveling down of benefits yet, although it is early days. the concept of redesigning benefits is not coming off the back of the Aegon withdrawal. Everything we are doing is all about replicating cover, and we are being generally successful in maintaining rates, and in some cases getting reductions. It is a shame to be losing Aegon. They had got to the point where their service proposition was getting to where it needed to be.”
Stephenson says: “There is a case for bulk transfers where there are a dozen or more cases. For example, whitewashing medical underwriting is easier where there are several firms lumped together, and it may be possible to get better terms.”
Bob Cheesewright, group risk proposition director, Zurich Corporate Risk says: “I can see why if I were an adviser I would say that my duty is to look at the current state of the market and get the best possible solution for the client.”