Managing the cycle: A plan for sustainable, customer-centric growth

As the European risk management community gathers in Madrid for the FERMA Forum, Adias Gerbaud (pictured), CUO of APAC & Europe, makes the case for sustainable growth in a challenging environment.

Personally, I am looking forward to returning to Madrid, where I started my career at AXA XL in 2007, and lived and worked in the city for over ten years. A beautiful and lively city, Madrid is the perfect place to reconnect with friends and colleagues in the risk management profession.

The FERMA 2024 forum comes at a critical time for our customers, and the insurance market. The risk landscape continues to evolve rapidly, as do the needs of our customers, and the demands placed on risk managers. And I’m happy to report, the insurance industry is in strong health, with strong capital levels and a renewed appetite for growth.

The big question is what do we do with this opportunity? Having built a more sustainable insurance market, are we now putting our collective energies into addressing the biggest challenges of our time – the risks and rewards of digital transformation, artificial intelligence, and the green energy revolution? Or are we returning to past behavior, and to the market cycles of the past?

Head winds and tail winds

After several years of corrective measures, the casualty industry in the area is now back to normal. Prices on many lines are now broadly adequate, and the market has turned its focus to growth. A stable and growing insurance market is clearly good news for customers, who have an urgent need for solutions in today’s changing and complex world.

That said, challenges remain. Land risks continue to intensify, impacting supply chains, and leading to civil strife (riots earlier this year in the French territory of New Caledonia caused more than $1bn in damage, and threatened Nickel supply chains). This year also saw the collapse of the Baltimore bridge and the global CrowdStrike blackout event, yet more reminders of the growing challenges of coordination and interdependence.

Bad weather is another risk that has ever existed: Insured losses from natural disasters in the first half of 2024 were close to $ 60bn, 62% above the ten-year average, driven by hurricanes and floods in the US, Germany, Brazil and the United Arab Emirates. . On the Casualty side, social inflation continues to drive claims and insurance costs: According to insurer Swiss Re, social inflation has increased credit claims in the US by 57% over the past decade. The EU Representative Actions Directive, growth in litigation funding and changes to the Product Liability Directive threaten to increase the frequency and severity of litigation in Europe.

A new section

Although the insurance market is now at a reasonable level, we are clearly entering a new phase of the cycle. Prices are estimated through 2024, and while the market remains disciplined, competition has increased.

But this cycle is unlike any other. Today, the risk situation is changing, and the need for insurance is increasing. Businesses and supply chains are experiencing digital transformation, while climate change and the transition to Net Zero will bring major changes across the globe. These two trends alone create huge growth opportunities for insurers who can create the insurance and risk management solutions that clients need.

To meet the needs of business as it changes and navigates new and emerging risks, we need a sustainable foundation on which to build. Insurers will need to be pragmatic, and work with clients to understand their risks, build resilience and professional solutions. We must learn the lessons of the soft market, and focus on sustainable growth based on meeting the changing needs of our customers, not just chasing existing businesses.

Investing for sustainable growth

So how will AXA XL face this challenge – to meet the needs of customers in the changing environment of the insurance market? We will pursue smart, targeted growth, which puts the client at the center of our strategy – and is supported by investment in risk exposure and technology.

Our ongoing digital transformation will generate significant efficiencies, as well as improve communication, enable real-time exchange of data, create insights, and deliver new services to customers. Automated analytics and data will free our people from underwriting, claims and risk reporting to work as a community of experts, helping clients with their complex exposures, and building solutions.

Another key plank of our strategy is the continued expansion of our risk consulting services. We want to help our clients better understand their risks and build resilience, not just transfer them. Our commitment to collaboration is also supported by our global captive program capabilities, which enable us to learn alongside customers, and assess raw risks.

We recently announced a partnership with Amazon Web Services (AWS) to develop the AXA Digital Commercial Platform, a secure risk management platform that will deliver intelligent insurance services that help organizations assess risk, limit exposure, and minimize losses.

See you in Madrid!

In the highly competitive insurance market, differentiation is important. AXA XL is a long-term partner of the corporate, mid-market, and specialty risk segments, with a long history in the captive and global program space. We have a comprehensive proposition, built on a strong balance sheet and global foundation, as well as our continued investment in our people, technology, and processes.

We look forward to hearing your thoughts and ideas at the FERMA Conference in Madrid, and working together on the challenges ahead.