Axel Theis is a member of the global Management Board of Allianz SE. On a rare visit to the southern hemisphere he tells Insurance Adviser how Allianz plans to increase its market share in Australia, and shares his global vision.
Insurance Adviser: Allianz was the only insurer to be included in the Top 50 of the Brand Finance Global 500 ranking in 2016, but your presence in Australia is comparatively small. What opportunities are there for Allianz to grow here?
Axel Theis: We have lots of opportunities in Australia as we are present in all sorts of distribution channels and we have strong relationships across financial institutions, and also with brokers and agents.
We do want to grow our direct channel, of course, and have been heavily investing in that, and in hiring the right people, but maintaining broker relations is paramount to us. Allianz Australia has a very high net promoters score with brokers.
Our Chief Market Manager in Australia, John Myler, has ambitions of seeing us move up to being the third largest insurer in Australia by 2020. I find that sort of ambition exciting, and we see great growth potential within the Allianz Global Corporate & Speciality (AGCS) and Allianz Global Assistance areas of the business here, so I believe we can achieve that goal.
IA: What sort of feedback has Allianz Australia been receiving from brokers?
AT: Both globally and here in Australia, the feedback we’re receiving from brokers is very positive. A core part of that is our stability. We don’t change our people all the time, so we are talking to the same people, we know their expectations and can build stable relationships.
Allianz will never be the cheapest, but we deliver quality and a promise which is coming from a financial and stable organisation. We’re operating in a world where there is much political and economic uncertainty, and a low interest rate environment, which is challenging for many businesses.
We are getting less return on our assets so we have to manage our underwriting business accordingly, but managing the key relationships we have, and having that stability at a time where other companies might be having a high turnover of their people, or be selling off aspects of their business, is an advantage.
IA: Where do you see room for improvement?
AT: There are always areas where you can get better. Where can we move faster? Where do we need more quality? How do we make sure we’re managing our exposures?
It’s a very competitive market environment, a very soft market, not only from a pricing perspective but also from a customer product delivery perspective.
What we have to do is really simplify our products because people expect us to be more transparent, to be faster and to have products that are designed in a way that are easier to understand.
This requires discipline and focus. It’s about asking the right questions. Today, we can get lots of data via algorithms as long as the right questions are asked. However, we can do better and we have to be better because of what’s going on in a world of different customer expectations.
For the industry to thrive, we will all need to be flexible, to adapt quickly to changing consumer purchasing habits, and to put trust in talented young people.
IA: Customer centricity is at the heart of Allianz’s new global renewal agenda. How are you going about doing this, and where do brokers fit in?
AT: You have to look at both customers and business partners. We are defining certain customer journeys and identifying their pain points – for example, where our customers might be unhappy or where we can do better to meet their expectation.
Sometimes you can be surprised going through a process like this. We might believe something is important to our clients, when really it isn’t. It’s about getting to know the customer better, knowing how they like to be communicated with and what they need to be kept informed of. It’s always a very interesting exercise, and can lead to increased efficiencies within the business.
A broker has different expectations. A broker wants somebody to talk to, who has the expertise and authority to make the correct decision within a given time frame.
A broker doesn’t want to go back because it costs time, it makes his or her life miserable, then they go to somebody else. That’s why I go back to my earlier point that it’s so important that you have a stable organisation.
IA: What insurance trends are you seeing globally that are, or will, be impacting on the Australian market?
AT: Cyber is the obvious one. As an industry we’ve been talking about it for years, but actually it took longer than expected to be understood and achieve market penetration. It’s only going to become a more important line of business, next to the more traditional property and liability and D&O.
In nearly every boardroom this is a topic which is getting discussed and they’re saying there are only two kinds of companies: the ones that know they have been hacked, and the ones that have been hacked but don’t know it yet.
The whole thing about IT security, about data, about how you manage your fire walls is becoming more and more important, certainly according to our Risk Barometer report. And of course we can’t ignore climate change. Australia is particularly susceptible to natural catastrophes. Touch wood it doesn’t happen again in 2016 but overall, when we look at the map of hazards, it is increasing.
IA: Looking at the wider APAC region, how important is China to Allianz?
AT: Our business model is a global model, that’s why in China we collaborate with Baidu, who is a partner in a digital offering, and we also have AGCS, Allianz Reinsurance and Allianz Global Assistance.
It’s not an easy market, but for us it’s a huge opportunity and that’s why we will never withdraw from such a market. As we are looking at our business from a long-term perspective, it’s not important when looking at certain markets whether you’ll be successful in three years or five years. We are looking at this from a 10-20 year horizon. We’re not making short-term decisions. I mean, we’re 125 years old. We can afford to play the long game.
IA: Another challenge and opportunity is the rise of the sharing economy. How will this impact on the insurance sector, and how will the industry react?
AT: This is a very interesting question and I can’t give you an answer. But it’s important for insurers to be participating in this process, not just watching.
For example, we put a Chief Digital Officer in place, and we’re investing heavily in start-ups. He has set up what we call ‘the Digital Factory’, which is set up very differently from a traditional Allianz working environment. You would not expect to meet people there with ties and suits! It’s more of a community, with an agile approach on projects, focusing on the early 20s and it’s always a fast-paced environment.
It’s a different approach, and we hope that we will learn a lot as a business and generate lots of ideas to change our products and change the way we do business. The sharing economy may well be part of that.
For the industry as a whole to thrive, we will all need to be flexible, to be able to adapt and adjust quickly to changing consumer purchasing habits, and to put trust in talented young people.
We’re not making short-term decisions. I mean, we’re 125 years old. We can afford to play the long game.
IA: Will this approach reap benefits in the long term?
AT: I believe so, yes. People change the way they think and their expectations change, too. Today, young kids, they are used to smartphones and iPads. They touch things and move things because that’s how they expect it to work – even before they go to kindergarten.
When these people grow up, you need to be able to communicate with them. I’m sure people are now talking about how we will have robo-advisers. Yes, we will have robo-advisers. Will it be only robo-advisers? No. It depends on the context, the topic, the subject, the product.
In a similar way, we are moving from actuaries to analytics. Can I run an insurance business without actuaries? No. But when it comes to predictive pricing, data is available which we should use, because if we don’t somebody else will.
That offers a huge advantage, so business analytics, which is a new profession, will continue to grow in importance to insurance companies. Five years ago nobody was talking about it. Now it’s everywhere. If you buy a new car now, it’s just like a smartphone on wheels, right? And I’m not talking about the future. This is real. It’s happening. And it’s happening in Australia, too.