Major changes are coming to insurance coverage, CEO says

  • People now want more than financial compensation from their insurers — a trend that's likely to continue in the years to come, said Benoit Claveranne, chief executive for international and new markets at French multinational insurer AXA.
  • Increasingly, people also want insurance policies that cover "nothing more, nothing less" than what they need, Claveranne said.
Logos of France's biggest insurer Axa are seen on a building in Nanterre, Paris.
Christian Hartmann | Reuters
Logos of France's biggest insurer Axa are seen on a building in Nanterre, Paris.

The days when insurance was all about financial compensation are gone — coping with that major shift has been a challenge that a top industry executive admits he's still trying to keep up with.

That sentiment from Benoit Claveranne, AXA's chief executive for international and new markets, came just months after the largest insurer in France announced a restructuring plan to simplify its operations. The company removed two layers of management and reorganized its business units to handle new challenges in the industry.

"International and new markets" is one of the five business units formed after the restructuring. Claveranne leads a team tasked with running AXA's business in 30 "fast-growing" and "extremely innovative" markets.

"If I was happy with our progress, I should be fired," Claveranne told CNBC in an interview late last month.

"So, how do we do? I think we're promising but we're always telling ourselves we should go faster because there are still too many things in which we believe we can do better," he added.

Benoit Claveranne is CEO for international and new markets at AXA, France's largest insurer.
Courtesy of AXA

Outlining the industry changes AXA is dealing with, the executive said customers now expect more from their insurers. In addition to financial compensation, people now want support to minimize the impact that an unfortunate incident has on their lives. That means, for example, health insurance must go beyond covering the treatment for illnesses to offering support for psychological or counselling services that patients may need, he explained.

Increasingly, people also want insurance policies that cover "nothing more, nothing less" than what they need, the CEO explained. Such options may not as widely available yet, but insurers can help consumers better understand the risks they face to prevent accidents or buy insurance that meets their needs, he said.

AXA in October last year launched a website in six European countries to help people gauge the risks of water leakage and theft at their homes. On the site, people can learn of the frequency of those occurrences and the costs to fix them — data previously used only internally to design and price insurance products.

"The world of yesterday, where I just give you money for a claim, is over," said Claveranne. "Our job is to say: 'How do we cover these things more and more?' and 'How do we cover them in a different way?'"

Emerging markets are the 'future growth engine'

In the countries that Claveranne oversees, AXA's presence is small compared to its stronghold in Europe and the United States.

But being relatively new in some of those markets has allowed AXA to try new ways of doing business, he added. For example, selling insurance directly to consumers through digital channels immediately after setting up a presence without getting bogged down by legacy systems and practices, Claveranne explained.

And those markets have the potential to grow so much more. Those countries — which include Brazil, Morocco, the United Arab Emirates and India — delivered 300 million euros (just under $350 million) in earnings in 2017. That's a 20 percent jump from the prior year but just 4.8 percent of the company's total earnings for the year, according to the AXA's annual report.

"The job of my team and I is to make sure that in the next three to 10 years, much of the future growth engine of AXA will come from us," he said. "The segment already grew by 20 percent in one year. I think we can more than double that income in the next few years."