AXA reaches out to low-income earners
Insurance targeting ‘emerging customers’ makes sense both socially and in business, says chief executive. By Jesus Alcocer and Pawee Sirimai
AXA has been cultivating customers in the emerging low-income segment and shifting away from motor insurance to maintain its above market growth rates.
The Thai unit of the French insurance provider brought home close to 3 billion baht in insurance premiums. Last year its top line expanded at close to 9%; in the past few years it has expanded 2-4 times the market rate average of 3%, said Martin Rueegg, chief executive of AXA Insurance Plc.
AXA is a mid-size provider in Thailand, ranking 16th (out of over 60 firms) in nonlife insurance, and fifth in life insurance. Predictions for revenue, market share or ranking for next year have not been finalised, according to Mr Rueegg.
Motor insurance brings about half of the unit’s revenue, followed by healthcare (13%), lifestyle (10%), travel (10%), and commercial, which is primarily focused on small and medium enterprises (SMEs).
“We want to accelerate our growth for diversified general insurance,” said Mr Rueegg, and away from the low margin motor car insurance business. “For lifestyle we are trying to double or triple the market growth, but our ambition to outperform the motor market is very low.”
“The Thai motor insurance is the largest [65% of the non-life insurance market], but is also heavily driven by regulation. If you want to drive you need to buy insurance. ”
Part of the reason behind motor insurance’s low profits is that it is very price sensitive. ”In the motor insurance market, the price difference between the cheapest and the most expensive providers is 30-40%.”
Another is that the market is highly diversified, with more than 60 players. Technology and regulation will drive consolidation, however, because of the large capital requirements, he said.
AXA is investing $1.2 billion in transformation and digitisation. A medium-sized stand-alone local company would be hard pressed to come up with the investment, he said.
Technology has allowed the company to reach previously uninsured consumers. Four years after Mr Rueegg took the post in 2013, the company’s customers have shot up from 100,000 to 140,000 customers. It also added 4 million others through partnerships: for example, AXA insures 3,0004,000 consumers through SIM cards and close to 2.7 million farmers.
“Insurance is expensive, and micro products like three-day travel insurance have not been marketed properly. They are almost like a 7-Eleven kind of thing, which would sell well if it were as convenient as sending a text. ”
Inexpensive micro-products can help the company penetrate the non-insured segment, which constituted 96% of the population in Thailand.
AXA has traditionally focused on the middle and upper-middle-income sectors, which form the bulk of its 140,000 customers with whom the company has a more direct relationship.
The 4 million premium payers (nonexistent four years ago) the company signed up through Advanced Info Service (AIS), among others, are usually in the lowincome segment. “It might be an immigrant from Myanmar who didn’t think he could afford insurance. The premium just gets added to his phone bill,” said Mr Rueegg.
“We see this as a long to medium-term investment. It’s doing good, but from a business perspective it makes sense. It is profit-making,” he said. While low income consumers ”are not a huge revenue driver”, the company hopes they will stay with AXA after their condition improves.
“That’s why we call them emerging consumers,” he added.
The key to commercialise this segment is technology, specifically automating the whole process to make sure the cost of operation is low. “Nobody touches the automated claims process of our SIM card consumers, for example,” he said.
“Insurance is not at the frontrunner in technology, but we are investing to make the consumer journey smoother. Some of these applications are not revolutionising, they just simplify the process.”
As with SIM card consumers, automatisation can have a large impact on claimsrelated operative costs. Leveraging big data and having access to a centralised data pool allow insurance firms to streamline their fraud detection processes, for example.
“Thanks to the technology, we were able to identify a professional witness who made 19 fraudulent claims in Singapore ”
AXA’s data, which can be used to adjust premiums and tailor products to specific demographics, is supplemented by “data insights” from telecom firms like AIS and banking partners like UOB, Tisco, Thanachart Bank and Citibank, as well as social media. “Facebook profiles of individuals and companies help us identify appropriate products,” he said.
The French branch is also partnering with Uber, Grab, Alibaba and rental bike providers.
On the claims side, technology can help claims reach consumers without filling out a paper application. “We will know if your flight is delayed, and can automatically pay you while sitting in the airport. There is no need to call people, or fill out paper application. ”
It can also reduce costs in acquiring and retaining customers, the second largest cost item on most insurance companies balance sheet after claims.
Advances in tech recognition have allowed chatbots to provide more humanlike services that can be integrated into instant messaging systems.