AXA aims at securing No.1 position in direct insurance market
Guy Marcillat, former president and CEO of AXA General Insurance, is probably one of the most well-known foreign CEOs to Koreans here, thanks to the popular television advertisements for the insurer where he appeared and spoke clumsy Korean.
His successor Xavier Veyry did not try to seek a chance at matching his celebrity, but instead he said he will focus more on securing his firm’s market leader position in the direct insurance market. When asked about whether he had considered starring in a commercial as his predecessor did, he said he did not want to be a “copy.”
“A lot of people asked me this,” Veyry said smiling during a recent interview with The Korea Times at the insurer’s headquarters in Seoul. “I have to say that it has been extremely successful. Because when I went out with my predecessor, a lot of people recognized him, and basically, it was great, and it was a very smart advertisement. But now I think copies are not as good as the originals. We have the original here and I don’t think Koreans need copies.”
But the French CEO emphasized that he will devote himself to the insurer’s growth in the local market, especially in the direct insurance business which has been growing fast in the past decade.
“The Korean direct insurance market is growing very quickly. It is one of the fastest growing direct insurance markets for motor insurance in the world,” he said.
As he pointed out, the local direct insurance market has been growing fast with the development of Internet and various mobile devices, and the competition has also become fiercer as big domestic players such as Samsung Fire & Marine Insurance have entered the market.
In 2001, when the first online motor insurance products hit the market, the market share of direct sales accounted only for 0.4 percent with the total annual premiums at 25.6 billion won, but it jumped to 22.2 percent in just 10 years with the total annual premiums at 2.5 trillion won.
“The move toward the direct insurance is natural. More and more companies are trying to sell direct insurance products. This is inevitable for the future. I think all insurance companies in Korea will strengthen their position in direct sales. So I see a bright and great future for direct sales,” he said.
As the main reasons behind the fast growth of the direct insurance market here, he cited unique characteristics of Koreans who are keen on Internet and have the tendency to do things quickly.
“Korean people are very well educated when it comes to insurance and they know what they want. Korean people are very familiar with technology. They love Internet and telephone. I would say they are very proximate with Internet and direct media and smartphones,” he said.
He also said that Koreans don’t want to lose time in trying to shop around for their insurance products, which is why they want “something easy to contact and easy to subscribe” and therefore insurers should be able to meet such needs in the direct insurance business.
“Now the big question would be how to make a difference in the direct insurance market. If everybody starts to sell direct insurance products, then we need to make a difference. As a sole and unique international player in Korea, I believe AXA can bring a lot of innovation to this market,” he said.
He also noted that their strength in the competition with other players is their international networks under AXA Group and their commitment to the Korean market.
“This is the market where we are happy to be, and where we want to invest, and we are the only international player to be present in the P&C (property and casualty) market in Korea. And that gives us an edge because we can also see what’s happening in other 52 countries,” he said.
“So my mission here is to make sure that we bring to the Korean market some innovations that have been successful in other countries and we adapt them to the requirement or to the needs of Korean people.”
But Veyry has a daunting task to save his firm from financial difficulties and improve its profitability, as the company posted disappointing performances in the past few years. In this regard, he recalled 2011 as the year of recovery and preparation for future growth.
Since 2001, AXA Korea maintained its No.1 position in the direct motor insurance market with about 20 percent market share for almost 10 years. But as big players such as Dongbu Fire Insurance and Samsung Fire & Marine Insurance started to sell direct products, the market leader position of AXA Korea has been continuously threatened. And last year, Dongbu became the market leader position in the direct sales with its market share of 18.7 percent while AXA became the second with the market share of 15.9 percent.
“2011 was a year of recovery and it was the beginning for transformation. I think this was a basis year on which we build our future and we have clear expectation for both in terms of growth and profitability,” he said.
Now, anticipations for future growth of the AXA Korea is now high, especially after the firm acquired 100 percent of German-based insurance firm ERGO’s Korean subsidiary ERGO Daum Direct early May.
ERGO Daum Direct is the number four player on the Korean direct motor insurance market, currently serving more than 500,000 clients for non-life insurance products with a focus on motor insurance.
Veyry said the acquisition will reinforce AXA’s leading position in this market, with the total number of combined clients estimated at 1.5 million.
“Basically this acquisition allows us to gain new customers. I believe this is important to gain visibility in the market. The visibility and leadership position in the direct business. With the acquisition, we have regained our number one position in the direct market, which is not an aim, but this is a maneuver to gain weight, control better our claims and improve our services,” he said.
He also expected that AXA can obtain other benefits such as ERGO Daum Direct’s expertise in the direct insurance market, saying “They have a lot of people with talents and experiences. We also want to improve the overall quality and overall expertise.”
Advice to fellow Korean
The 38-year-old Frenchman enjoys driving here. He would be one of a few foreign CEOs here who drive themselves.
Living here for about 10 months, he finds Koreans are very friendly but they become a bit impatient when they drive a car, which is the one of main factors behind high accident rates here.
“I think that people are perhaps a bit impatient and people are in a hurry here in Korea. This is probably the main driver for the frequency of small accidents that we’re seeing,” he said, suggesting they should be relaxed and less distressed to avoid accidents.
But he pointed out that what’s making driving more dangerous is people’s bad habit to use mobile devices, which is especially serious in Korea. He said he has seen many drivers watching videos and doing something else while driving, which increase the severity and frequency of accidents.
“One message that I want to give is, I encourage people to refrain from doing something else. Driving is dangerous and requires full attention,” he said.