Annual Summit: The Future of the Insurance Industry with Serge Raffard, Strategy, Marketing, Distribution Officer, Allianz SE

Amit Frenkel interviewing Serge Raffard Strategy, Marketing, Distribution Officer, Allianz SE, about “The Future of the Insurance Industry”

Serge Raffard Bio:

In his role, Serge Raffard is responsible for the design and steering of the Group strategy, the Marketing activities of the Group, especially Brand & Customer Excellence and Distribution effectiveness to transform from Push to Pull. Serge joined Allianz in 2018 initially as Group Strategy Officer. He has successfully led the development and roll-out of the Simplicity Wins Strategy and leveraged a great heritage to push the Allianz Brand to the #1 position in the industry.
Serge joins from MetLife, where he was the Asia Head for Strategy, Product, Health, responsible for the Strategy development, the 200 employee product function and the USD 3.5b Health insurance business. Prior to joining MetLife, Serge was a Partner with McKinsey & Company based in Hong Kong and Switzerland. He co-led their Asia Insurance Practice and led their Asia Corporate Finance practice. Serge started his career with Total in Dubai, before moving to JPMorgan’s M&A team in London.
Serge holds a MBA with distinction from the Kellogg School of Management. He also has an MSc with scholarship from the London School of Economics, a Diploma with honors from Imperial College in London and an MSc with honor in Mechanical Engineering from ENSAM in Paris.
Serge is a member of the inaugural group of Asian Leaders in Financial Institutions program which is sponsored by the Monetary Authority of Singapore.
Serge is married with 3 children and lives in Munich. He is a keen sailor and mountaineer.

Interview Transcript: 

Amit Frenkel:

Hi everyone, I’m happy to present Serge Raffard, who is the group strategy marketing distribution officer at Allianz. His resume is very impressive, so I’ll try to size it down. Serge joined Allianz in 2018, he is responsible the group strategy, the marketing activities of the group, especially the brand and customer excellence and the distribution effectiveness. Previously, Serge worked for MetLife where he was the head of Asia, head of strategy, product, health, responsible for the strategy development of those 200 employees, product functions and a 3.5 billion health insurance business.

Amit Frenkel:

Prior to MetLife, Serge was a partner at McKinsey & Company based in Hong Kong and Switzerland. He was the co-lead of the Asian insurance practice and led the Asia corporate finance practice. Serge started his career with Total in Dubai and before moving to JP Morgan M&A team. As to education, Serge has an MBA from Kellogg, MSC from London School of Economics, a Diploma from the Imperial College in London, and an MSC in Mechanical Engineering [inaudible 00:01:21] all of them in honors or distinctions.

Amit Frenkel:

Serge is married with three children. He lives now in Munich and is a keen sailor and mountaineer. Hi Serge, thank you for being with us today.

Serge Raffard:

Thank you Amit, good to be here.

Amit Frenkel:

Maybe you can start, everybody knows Allianz, but if you can give us some hard facts about what we don’t know about Allianz, where you work, the geographies, kind of product distribution channels and so on.

Serge Raffard:

Yeah. Thank you. So, Allianz is one of the largest insurance and asset managers in the world. To give you a few facts and figure, we are roughly 140 billion Euro in revenues. We manage 2.3 trillion euros of assets with 150,000 employees worldwide. We are present in 70 countries in the world in all continents. That’s a bit of the overview of Allianz. Maybe a few things we know less about Allianz is that we are also the largest service company related to insurance, so whether it’s your if your car is not working on the road to health services, to cyber protection services and the web, the largest provider of such services in the world.

Amit Frenkel:

You are also a holder in Dresdner bank.

Serge Raffard:

No, that’s all history, not the best time of our history.

Amit Frenkel:

Okay. So let’s talk about the insurance industry. It’s a very conservative working for a hundred years. There’s no major change and you know, like every industry there are disruptions and your industry is disrupted as well. So can you share with us your digital transformation journey and was it offensive you saw identify new opportunities? Was it more defensive because of alternatives or competition?

Serge Raffard:

Yeah. Look, it comes from several fronts. It all starts with the customers. As we know, customers all over the world used to experience products and services digitally. And as you say, okay, let’s go to the old fashion. Even man of the pro was we call it in our industry, which was the Prudential agents knocking on one door after the other based on his bike, obviously, that’s quite a striking difference. And so we needed to indeed adapt to our customer needs. We needed to adapt to the way they like to be served. I not just with an agent face to face, but also digitally, meaning typically most of our customers now would research for their product and services online, and then either conclude online or want to go to an agent to get an extra explanation. And that leads me to the second component is unfortunately for a number of reasons, the insurance industry and the insurance products are very complex for the customers.

Serge Raffard:

And, so we try to simplify those products as much as we can. Having said that, there are two reasons why there is still a need for human explanation. One is some of the products and decisions that people need to make are very long-term decisions. Especially if you think about retirement or insurance for large complex risk. Like cyber risk, and so on ensuring cyber risk is, you don’t take this at the click of a button, at least for most people. And then, in addition, we need to simplify, because unlike other industries, we couldn’t get scale economies.

Serge Raffard:

Typically in insurance, what you have seen is that the bigger you are, the more expensive you are, which is different from other industries where you get scale benefits. And it’s only by indeed simplifying our product, our processes, but then we can really streamline the backend of it and then get scale benefits. In addition, and to stop with my answer to your question, obviously, we got worried that some indeed startup would start eating our pie here. I would say fortunately on that front, that didn’t happen too much, a few access for startups in the insurance space, but only a few. And they really tough time to scale, even if they may have some indeed better customer value proposition, but the interface or the surveys for a number of reasons, they really can’t scale.

Serge Raffard:

And so the big let’s say threat, is more from one of the large digital platforms that are already today taking a big part of our value chain. So if you think about Google, you know the amount of money that insurers are spending with Google for search engine advertisements is massive. And it probably represents easily 20% of the value chain being captured by Google.

Amit Frenkel:

Right. So let’s talk a little bit about Corona. Here comes February. We start to encounter it. And the world stops and, changes our life. And one could fear that it’s going to be a major hit on the insurance industry, but apparently, people are not driving so much, they’re safer at home, less theft. So, I wonder how that affects your business short-term and long-term in terms of assessing risk profile because much of the steady information has changed. So how do you take that?

Serge Raffard:

Yeah, yeah look, I think everyone among the audience, the first thing we had in mind is how can we keep our customers and our employees safe? So that was really the immediate response, which actually was very useful for us because we were really focused on seven measures that we deployed globally, back to your nosy service company. I was mentioning before we managed to very quickly, in a matter of weeks, deployed in 30 countries in the world, some remote health offer, whether it was telemedicine, tele- doctor on call, long chats to help clients. And even non-clients with COVID-related questions, but also non-COVID-related questions as people, who did, or didn’t want to go to a doctor physically. And so that was really easy, the immediate response. And then on the back of this, we adapted them obviously the year is not finished, but if you look at analyst expectation of where we should finish the year as a group, we should be flat you’re on your own revenues.

Serge Raffard:

She is quite good. And you are clearly not the Amazon of the world that so, demand skyrocketing on the other end that we managed to keep year near revenue frats is quite remarkable, but then indeed, this is a reflection obviously Sharpie’s different line of business. So if you pick Asia or obviously, and especially China, these have already recovered fully and he’s sailing as ever, especially because people got even more scared, with more scared. People mean more risk and quote-unquote, it’s good for insurance companies because there is much more demand if you had this insurance.

Serge Raffard:

One of our lines of business has increased by 600% this year in China. So, that’s on the one hand, obviously, on the other hand, we got hit, especially on the profit side, in some other line of business. So for example, while the largest event insuring the world, so you can imagine all the events that got canceled in the year in the world. And we insured a lot of those. We are also the largest movie producer insurer. So obviously a lot of movies either make it to the end. So, that’s obviously impacted us. But as you say, on the flip side, people drove less. So that meant fewer accidents. Obviously, we try to return part of this money back to customers while we could, but still, that help also to compensate some other lines.

Amit Frenkel:

Great. Let’s talk a little bit about technology. it seems that the market really rewards a lot of insurance, Insure Tech companies, some provide technology, some are playing as an insurer. So, companies like Lemonade and Hippo and Next Insurance that emerged from Israel, but there are a lot of others. And I wonder, why do you think the market likes it that much? And do you think that this is a threat for legacy players like yourself, or you should fear the Amazons and Alibaba of those worlds.

Serge Raffard:

Yeah, look, it’s more the latter still, again, I have seen the Lemonade of the world is clearly bringing some great new ways of delivering insurances in a much simpler way to the customers. So I’m also learning a lot from them. And by the way, it’s, we been one of the initial investors in Lemonade. And so obviously you are very happy about the test because we are making quite a nice return on our investment in lemonade. And then obviously we have the discussion with the companies, but then again, based on what we see, we’re seeing that there is a bit plateau too, it will take decades, at least so far from what we’ve observed before these companies managed to get to the scale of an ion.

Serge Raffard:

So again, to generate almost 40 billion of revenue every year by selling one policy at a time, it takes a lot to replicate this and what we have seen, it’s a number of reasons that explain this one is typically these companies are very good when they start on a really mono-product, but as soon as they try to branch on multi-product, then they basically face the same complexity that we have, and then they become less relevant and less distinctive, some very specific products that are doing great. And again, while learning a lot from them and we should not be complacent. And therefore, again, I think it’s more the release, the established large digital platform that can be really bringing more, disrupting the industry at scale. And it’s my comment from Google.

Amit Frenkel:

Right. So, maybe we’ll finish with something that may be interesting for the audience. You have hundreds of investors out there, and what kind of technologies you are looking for, where do you think the white space of that can be handled? A lot of AI and ML companies that are trying to crunch information and get a better assessment, where do you see the opportunities and insure them?

Serge Raffard:

Yeah. And you’re bringing a lot of good points because I would say, if you look at probably the last 5 to 10 years, initially let’s call it the digital transformation was really more the front-end the customer interface. Is a lot of cool apps that try to indeed simplify insurance. But I would say this is important, but still, it’s quite limited in terms of application. And at least on our side, we use the Adobe marketing suite, like many other companies, to really improve our customer interface digitally. And although it’s quite a complex tool to use, it’s quite a remarkable tool to use, to bring scalability across multiple geographies and lines of business. And Adobe has been really good with that. Then I think why using much more technological innovation is more in the backend and that’s where I indeed. If you think about, how much we should automate this industry, it’s massive. And we’re only just at the beginning of this, and that’s why we’re really bringing new technology every day. Whether it’s robots, whether it’s artificial intelligence.