Global insurer AXA last week saw its underlying earnings jump 3% in the first half of the year to €3.2 billion, with group CEO Thomas Buberl pointing to the company’s multiple digital initiatives, which form part of its Ambition 2020 strategy to ‘focus and transform’.
AXA is looking at how it can automate processes and remove people from the equation, use data to better tackle fraud and also work with SMEs to introduce some more innovation.
Ambition 2020 was announced in June of last year and focuses on “accelerating business innovation to meet our customers’ rapidly evolving needs in the digital world” in order to achieve underlying earnings per share of between 3% and 7%, as well as have €2.1 billion pre-tax cost savings by 2020.
Speaking to analysts following the release of the first half earnings, group CEO Buberl said that the company is focusing on areas of growth where it can bring the business closer to the end customer. He said:
If we go and start with the overall, we can look back on a very strong first half year, with a underlying earnings per share growth of 5%. This is in the middle of the range that we have communicated last year for the Ambition 2020 between 3% and 7%. The adjusted earnings per share are at 4%.
In Ambition 2020, we are not focusing on the overall volume growth. We are focusing on growth in specific segments. Those segments are segments where we are closer to our end customer, where we have a natural end customer contact, which is the Commercial P&C business and the Health & Protection business.
We have also followed that logic in the first half of 2017, with a plus 2% in Commercial Lines business and a focus of that in the non-motor business because we believe that the future is there for us and that is also where we have the most end customer contact. The same is true for the Health business, where we have increased our growth from last year of 4% to this year of 6%.
Improving the customer journey
Buberl explained that AXA’s digital initiatives focus on three specific areas - improving the customer journey through the use of automation, making better use of data, and exploring new business models.
On improving the customer journey, Buberl said that investments already made across the company, the returns are being seen relatively quickly. He said that the aim is to boost transparency with the customer and increase self-service.
The first investment area is around the question, how can we improve the customer journey?
Improving the customer journey means how can we automate processes where you don't need people anymore, where you can automate and streamline. The second one is the question, how can you better play the interplay with direct and agent, with the aim as well as to reduce the commission. And the third one is the question, how can you be more transparent towards the customer and also push self-service with the customer, which again, you then don't need people to do it.
If we take a simple example, AXA France. In AXA France, which is one of our biggest markets, this is already in implementation. This one example of many significant increase in the automation rate of the business, simplifying the business, centralizing it.
We have achieved in AXA France a better interplay between direct and agents. If you want to buy a motor insurance in AXA France today, you will most likely be focused on a product called Clic & Go, which has a much lower commission ratio than the traditional product used to have in the agent channel, with the effect that the agent sales for motor has fallen to almost 30% from a very different level.
And then when you go further and look at how have we increased transparency on the question, where does your claims payments down, how can you also register claims online, this has also gone up significantly. Those investments have been done and have also been done in other countries and will pay off relatively quickly.
Making better use of data
Buberl said that AXA has invested significantly in its data labs in Paris and Asia, where it employs data scientists to make better use of the data that the insurer already has. For example, it is guiding product development. He said:
Again, this is something that I would expect over the meantime to really kick-in, but we also have, obviously, focus area in the short term that kick-in. We have been working a lot on the question of reducing claims fraud. Gaëlle [Olivier - CEO, AXA Global P&C] has been working a lot with her team on cat modeling. Those things are already in place, but there is many, many more initiatives.
We have, for example, started and rolled out in AXA France something called 360°. It is basically like an Amazon approach where you get to understand what is the next best product to buy with the aim of cross-selling customers. This has worked so far in the pilot very well and, when it's going to be rolled out, will also kick-in.
New business models
And finally, Buberl pointed to AXA’s investment in its €100m InsurTech incubator, which is dedicated to conceptualizing, launching “disruptive products and services for insurance clients”. Selected projects are led by either AXA employees or external entrepreneurs and the hope is that they will benefit from both the agility of the incubator, but also AXA's scale and expertise.
And then you've got a third phase where I would say they are more the longer term ones where we invest in new business models, where we create new business models. We have launched an incubator called Kamet where we have very different business models to launch already that are now in the phase of growing.
Again, to take a very classic example and real example, we are in London here, [working with a start-up]. It is a telemedicine service for foreigners in London to have local doctors connecting to them. This has been founded, but it's obviously now with very few customers already working, but needs to grow now. And there, I would expect those things do come longer term.