A higher number of products, a wider range of customization and a new customer-first mindset: these are some of the big levers that have, through a gradual process and with the aid of technology, disrupted the insurance industry. But at the same time, tried and true models such as the traditional broker model have proved remarkably resilient, says Jef Van In of AXA.

In the last decade, insurance companies have faced two major, ongoing challenges, and these challenges have been the driving force behind the industry’s disruption. The first is the customer journey. Customers expect to be in control of every step of every process. This is not only true for our business, it is equally true when they take their car to the garage, take out a newspaper subscription or when they do their shopping online. Every interaction must be intuitive and digital. This is a difficult exercise, especially for companies that did not make the digital switch in time.

Jef Van In, Axa Next

Jef Van In

Axa Next

The second big challenge is manpower. Or rather, it’s the lack of manpower. For a very long time, insurance was a tailor-made business, which inherently meant that it involved a lot of manual interventions. These operations are becoming increasingly difficult to manage because we simply don‘t have enough people to do them. Especially with the sudden shortage on the labor market, the enormous pension wave we are going through and an aging population, this is a pressing problem.

Standardization and automation

The solution to this problem is, in my opinion, standardization and automation. Compared to ten years ago, we must be able to do the same work with as many or fewer people. For the customer, this means that our services will become more and more modular and standardized. Our products and the associated conditions become simpler. The banking sector had already done this exercise much earlier on. The days when you could choose from 25 different credit cards are long gone. It is better to make one product that you can easily modulate than 27 separate products. 

Standardization makes it much easier for insurers to automate their entire value chain. A second advantage is that it is also easier to offer your products through multiple channels and turn them into a kind of commodity, especially in retail insurance. Besides the advantages, there are also challenges. This evolution forces insurers to pay more attention to their brand and their brand values. Customers must put trust in your brand; it‘s up to insurers to live up to this.

I would like to zoom in on two technologies that have played a very important role in this evolution, and these are AI and blockchain. AI has brought an incredible revolution to our industry. The power to quickly find out what both your customers and your employees want is an incredible advantage. At AXA, we‘re putting a lot of effort into this. Blockchain, in turn, has meant a huge push towards ease of use and customer experience. Gone are the days when you had to go to four different parties with three different documents after filing a claim. All the paperwork is now authenticated in a blockchain where all parties can read and fill in exactly what concerns them (and nothing else).

The broker model is not broken

It is not only insurers who are forced to take thee steps. The same applies to brokers. They too must digitize and standardize if they want to remain competitive. They still have their role to play, by the way. The death of the insurance agent has been reported since the 1950s, and it is completely exaggerated. At first, we were going to sell insurance by letter, then by phone and then via the internet. Eight decades later, we are still working with brokers. It proves that this is a very resilient model. 

In the same way, I also see that it remains quite difficult for new players to profitably break into the insurance market. Insurance (as banking) is a typical replacement market in Western Europe. This also means that customer acquisitions are very expensive and that existing players fight like hell to secure their positions. Insurance is also a typical business where scale is very important. For newcomers, it is very difficult to generate that scale quickly at an acceptable price. Not only is the cost of building your own platform high, but there are also all the regulatory requirements you have to meet. 

Business model

Many observers in recent years have also been convinced that insurance companies and banks would expand their scope beyond insurance and start selling all kinds of other offerings. I do not see that happening. From a purely economic perspective, you must make choices in your business model. Just because something is technologically possible does not mean there is a valid business case. As an insurer, you always have to ask yourself the same questions: Is this scalable? Can I build a portfolio with this? Is there efficiency in the value chain? If that is the case, then go for it. If not, stay away from it. That does not mean that you should never make choices. At AXA, for example, we made health one of our top priorities years ago, and it is one of the core issues that we have been working on in recent years. 

About the interviewee

Jef Van In got his degree as a Commercial Engineer from the KULeuven and received an Executive MBA from the Flanders Business School. In 1993, he started his career in commercial and institutional banking at ING Bank Belgium. In 2011, he joined the AXA Group to become CEO of AXA Bank Europe. From 2013, he also became CEO of the AXA CEE region insurances. In July 2016, he was appointed CEO of AXA Belgium and Chairman of the Board of Directors of AXA Bank. Since March 2022 he is Group Innovation Officer at AXA and CEO of AXA Partners & AXA Next.

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