Focus on innovation and service will not be hit by efficiency drive at AXA CS: Caillat

French risk managers will not see a reduced level of service or commitment from AXA Corporate Solutions in 2018, as AXA group continues its new leaner and more focused strategy, Ambition 2020, under group CEO Thomas Buberl and his team, according to Matthieu Caillat, the unit’s French CEO.

Back in mid-November, Mr Buberl confirmed to investors that Ambition 2020 would lead to a 25% reduction in central functions cost, some €300m cost efficiencies over a two-year period, and an acceleration of AXA’s overall €2.1bn cost savings target. This will help deliver an estimated adjusted return on equity between 12% and 14% during the period 2016 to 2020.

But Mr Buberl also stressed to investors that, as the efficiency drive continues, the group will continue to invest heavily in new technology and innovation as a whole. Some €200m per year has been dedicated to innovation from within the group’s existing M&A budget under the Ambition 2020 project.

The group launched AXA Strategic Ventures two years ago, an investment fund that has already invested in about 20 insurtech and fintech initiatives involving startups. AXA said these projects are “reinventing” the insurance industry and the world of asset management.

Mr Caillat explained to Commercial Risk Europe that the Ambition 2020 strategy is not just about simple cost savings but delivering a more efficient, responsive, innovative and user-friendly AXA for customers.

“This is not so much about just reducing costs. It is more about making AXA simpler and easier to deal with as an organisation, and bringing all the value that the group holds to the customer via a more efficient delivery system. There is a cost benefit of course but the key point is making our organisation leaner in the centre, and stronger in the operations to invest where customers need investment, not least in risk management and loss prevention,” he said.

For French risk managers, this means that AXA Corporate Solutions will be more “nimble” and “quicker” to deal with, said Mr Caillat. It will also be able to offer more innovative solutions by drawing on group resource more effectively, he added.

“We are investing in innovation as a group and we can now more effectively leverage what we are doing as a group,” said Mr Caillat.

This is the core strategy for 2018. “We want to further accelerate the fact that we are not just here to pay claims. Claims are critical of course and we will continue to ensure that we remain the best in the market in this regard. But we will also be rolling out the full range of services and tools within the group, such as digital tools and more support with loss prevention and benchmarking claims experience for customers to help prevent claims,” he explained.

One important driver of this shift in emphasis from traditional insurance product provider to service provider and risk management partner, is an evolution in the role carried out by risk managers as they move beyond traditional insurable risk, he added.

“Risk managers in France and throughout Europe are becoming more involved in wider risk matters, not just traditional P&C insurance programmes. Travel risk for staff and accident and health, for example, are becoming more important for risk managers, as are captive strategies for business-to-business and business-to-consumer relationships. We are working with risk managers in new areas using their captives with parametric solutions, for example, and this will only accelerate as AMRAE continues to promote the wider role that risk managers can play. We can support this development with wider solutions,” said Mr Caillat.

The rise of big data and digitalisation is one key area of focus for AXA Corporate Solutions in France, and forms a central part of this strategic shift, explained Mr Caillat. He sees two key aspects in this exciting area of development.

First, there is the value that new technology can bring to help AXA handle and manage its insurance programmes. “API and blockchain can help us handle our business more efficiently. We can stop repeatedly typing in data at all levels of the chain and collectively – insurer, broker and customer – deliver a much more efficient market,” explained Mr Caillat.

Second, there is the huge opportunity to use data to more accurately analyse risks. “We need to use the data in the market to carry out much stronger risk assessment and loss prevention for customers. There are still risks that this market really struggles to model. In the retail motor market, underwriters can accurately predict the risk for individual drivers nowadays. But for corporate risks, in areas such as business interruption and supply chain, the analysis remains challenging. With the new data and analytical tools, we can go much further. This is [about] much more than day-to-day savings,” he said.

“This is about using the data to more accurately assess and model difficult risks such as cyber and non-damage business interruption. It is all about how you use the data to gain a better understanding of the risk and, through that, become better at loss prevention and extending the boundaries of insurability to benefit everyone,” added Mr Caillat.