AXA has been perennial leader in the global insurance market, and in 2016 they founded an Emerging Customers business. We sat down with the Head of AXA Emerging Customers and newly-named 2020 Insurance Woman of the Year by the Geneva Association, Garance Wattez-Richard to discuss pushing the boundaries of insurability and making protection relevant and accessible to more segments of the world's population.
MiN: What motivated the creation of AXA’s Emerging Customers segment, how has it evolved and where is your main focus in inclusive insurance at the moment?
Garance Wattez-Richard: Historically, insurance companies perceived it impossible to develop profitable and sustainable solutions for lower- and middle-income populations in emerging markets.
In 2016, AXA’s leadership decided to challenge the status quo. We believe that protecting emerging customers and contributing to the growing financial inclusion momentum is not only a moral imperative, but also a fast-growing business opportunity, thanks to both the unprecedented speed at which this middle class has grown and the massive increase in mobile phone penetration in these countries, so it did not take much convincing.
Over the first four years, we have been able to grow the number of low-to-middle-income customers (2 to 20 USD a day) from 3 million to nearly 19 million at the end of 2019 across countries in Asia, Africa and Latin America. The client research we have conducted indicates that up to 85% of these clients had never accessed insurance before.
We are convinced that we cannot simply downsize our existing offerings in terms of coverage and premiums, but that we must reinvent them through human-centred design principles. Products are designed by involving end customers and distribution partners to ensure that our solutions are relevant.
There has been an increased focus on health, and other value-added services leveraging technology and alternative distribution partners like MNOs, banks and MFIs, and remittance companies.
MiN: In the wake of Covid-19, what has AXA Emerging Customers been doing for its clients in this segment and how are you adapting any protection schemes on offer?
GWR: Our response to the crisis has been focused on providing valuable health services and accompanying our partners through the crisis. Over the last three months, AXA Emerging Customers has deployed telemedicine solutions in Malaysia, the Philippines, Indonesia, Thailand, Egypt and the United Arab Emirates with additional launches slated this month in India and Mexico. The solution includes access to Covid-19 symptom checkers and free tele-consultations with certified doctors. Almost half a million Emerging Customers were reached this month, and we can extend access to over one million by ramping up both existing and new schemes.
Emerging Customers often forego treatment as they cannot afford it, and are not diagnosed for chronic conditions, relying on informal medical advice. Offering high-quality standardised advice to detect issues earlier keeps people out of hospital.
Besides the promise of improving health outcomes, mobile health makes our inclusive insurance more tangible and should be an important awareness and sales driver for our broader insurance offer in the future.
The microfinance industry has also taken a hit from the crisis. We have taken several measures in order to accompany our partners. In Egypt and Morocco, where our main partners are microfinance institutions, we have deferred payments, while offering free coverage, to share the financial burden of the crisis with partners and customers.
MiN: You have recently been named Insurance Woman of the Year by the Geneva Association. What drives you to continue tackling the insurance protection gap and protecting underserved populations in emerging markets?
GWR: The Geneva Association Women in Insurance Award is a precious recognition of the work my team and I have been doing to push the borders of insurability and make protection relevant and accessible to more segments of the world's population. This work, sadly, will be even more necessary as the Covid-19 crisis hits all countries, emerging and developed, extremely hard.
Knowing that today, four billion people remain unable to access and afford insurance products that can help them manage their risks better, is the compass that drives both my team and myself on our mission. The challenge is huge, but so is the reward.
MiN: The gender gap has also been a huge component of emphasis when speaking of the low-income segment. In your view, what is needed to address this specific issue plaguing customers in this space?
GWR: “Women hold up half the sky”, as the Chinese proverb goes. And their half is a critical one for insurers, because of their continuing role in the holistic protection of their extended household: children, husbands, elderly parents and even community. It is important to complement – not replace – low-income women’s risk management solutions with a tailored insurance value proposition.
Insurance plays a key role in driving gender equality. There are clear biological differences that put women at greater risk, notably pregnancy complications - a risk which we cover contrary to most traditional policies. Socio-cultural barriers are also an issue - in many countries, property laws exclude women from inheriting family assets in case their husband dies, for instance, so life insurance policies nominating wives as beneficiaries can play an essential role.
Applying a gender lens is central to our work. In the SheForShield: Insuring Women to Better Protect All report, developed with the IFC in 2015, we found that women are more risk-aware (not risk-averse) and willing to invest in the holistic protection of their family and notably in Good Health and Wellbeing. In partnership with the Lead Foundation, a leading microfinance institution in Egypt, we designed hospital cash products for their 200,000 women borrowers. These are extremely basic covers: you get a cash lump sum for every night in the hospital, for any reason. We paid thousands of claims in the last twelve months, demonstrating the value of insurance to women - 90% of whom were first-time insurance policyholders.
MiN: AXA also plays a role in the Insurance Development Forum, in close cooperation with MiN. In your words, what’s the value of collaborations like this and what excites you most about partnering with MiN in particular?
GWR: Just as the final SDG is about Partnerships to Achieve the Goals, the example outlined in your question illustrates how much inclusive insurance is all about collaboration. Achieving sustainable development through inclusive insurance requires continuous cooperation between a number of actors, public and private, to provide the world’s vulnerable with new ways to manage risks.
But we need to go further as an industry if we want to deliver a measurable impact on societal resilience. The SDGs come with measurable KPIs on each goal, but there is a need for a specific measurement on the insurance side as well, for example through the World Bank’s Global Findex study which measures the penetration of banking and payment services every three years, and through the Microinsurance Network’s Landscape Studies which measure the number of people covered by inclusive insurance worldwide.
The creation of the Insurance Development Forum as the platform for collaboration between insurers and international organisations will be an essential catalyst, as building resilience at the service of SDGs is something which can only be done in the spirit of partnerships for the Goals. It is of great value that the Microinsurance Network has taken a leading role alongside AXA in driving its work on inclusive insurance.
MiN: Our recent annual member meeting was held virtually and featured a series of regional deep dive sessions, in which AXA took part in actively. What is your current view of the MI market, especially in your regions of operation?
GWR: Even if the potential in our priority markets is huge, and the need for inclusive insurance has been exacerbated by Covid-19, we continue to face issues to bring down the barriers of access and affordability and to build more trust and understanding of insurance among our target customers.
Despite covering similar risks across the board, each insurance market is very different from one another in terms of the regulatory framework, presence of incumbents serving our target segment, or on the penetration and usage of technology. This requires a flexible approach on the way insurance solutions are designed and delivered but should always be grounded on a deep understanding of the needs, behaviour and expectations of the end customers.
More importantly, we need more insurance actors in the inclusive insurance space, because by growing the market together, we generate synergies that accelerate insurance take-up among first-time buyers and facilitate the conversation with other relevant stakeholders (e.g. regulators).
MiN: Ready for a rapid fire on the sector?
- What is the business case for MI?
GWR: The business case for inclusive insurance is based on volumes and requires rethinking every element of the value chain. Still, the business case is strong because we are pushing the borders not only of insurability but of the potential for economic growth.
Insurance adds value and it is also a means towards broader financial inclusion from the point of view of banking inclusion because an insurance product entails, by definition, risk sharing. If a product is in place, then lending institutions will feel more comfortable in financially including people who have risk profiles from their point of view that could have never been included financially before, but they can now because the risk is shared with insurers.
Then, we also have the digital revolution, which is essential because that's where we can address the problem of cost. Digital technologies enable us to knock down the incremental cost by another zero.
- What’s the role of InsurTech and can it create true efficiencies?
GWR: Technology is undoubtedly a key enabler for financial inclusion. However, we consider it to be a means to an end, rather than an end in itself. Especially when addressing first-time buyers, technology’s role “enables” rather than “replaces” services.
Human interaction is still expected by the emerging customers segment as it generates trust, and eliminates some of the barriers of adopting fully digital solutions – level of tech-savvy, “cash is king”, spotty access to connectivity.
Seizing on the combination between digital services and human interaction will optimise efficiencies and deliver the best customer experience.
- Are insurance companies trying hard enough to develop inclusive insurance for emerging markets?
GWR: Insuring low- and middle-income people in emerging countries remains a huge untapped opportunity for the insurance sector. What remains unclear for many is how to tap into that opportunity profitably. There is still a lack of expertise and customer understanding to do so.
However, it is not only insurers that need to step up their game, I see this as an ecosystem play where insurers, partners, regulators and other organisations must join forces to foster sustainable inclusive insurance market development.
MiN: When did AXA join the MiN and why?
GWR: AXA has been part of the MiN since we created the Emerging Customers segment in 2016, because we understood that creating a market was not a challenge we could take up alone. We wanted to identify and connect with the actors in the inclusive insurance space to join forces, build capacity and hold each other accountable for the impact we generate together.
MiN: Describe how you see the MiN’s role and where you see untapped opportunities for the Network to make a difference as we move forward.
The MiN has a unique position in that it sits at the centre of the inclusive insurance space, convening all stakeholders that share the mission to reduce vulnerability of low- and middle-income people across the world.
It is by becoming the advocate of that shared mission that the MiN could accelerate on:
- Positioning inclusive insurance as the final component of inclusive finance and financial health within broader debates
- Fostering dialogue among its members to ultimately tackle the barriers for insurance, with a strong focus on regulation, to foster insurance uptake in an orchestrated way.
- Sharing best practices through conferences, forums, and publications from all players involved
- Leading measurement and evaluation efforts on the progression of inclusive insurance across the world, be it through The Landscape Studies, or other efforts (e.g., FINDEX)
- Attracting new members into the Network, including commercial players like insurance companies, InsurTechs, and intermediary insurance organisations
This interview also includes inputs from members of AXA's Emerging Customers team: Laura Elena Rosado, Quentin Gisserot, Nadia Boughaba and Mallika Patkar