"AI has begun to alter most areas of the industry"

Borja Díaz, Allianz's CEO for Iberia, reveals the key lessons the company has learned from the pandemic and his goals for the future

Posted Monday, April 11th 2022
"AI has begun to alter most areas of the industry"

LL: What trends do you see developing in the insurance sector in the past year?  

Díaz: During 2021, there has been a certain recovery in the sector. Insurance companies obtained premium income of almost €62 million in 2021, which is 5% more than in 2020, but still 3.65% below what was achieved in 2019.

The non-life branch has not recovered lost ground. The auto business has transferred to 2021 the correction in premiums, derived from the non-use of vehicles in 2020; health insurance grew by 4.93%, a level similar to what it has been doing in recent years; and multi-risk insurance performed profitably in 2021, partly due to the incidence of natural phenomena that occurred, as well as an increase in its contracting linked to the greater mortgage cycle.

Risk life insurance has grown by 3.47%, thanks in part to the normalization of mortgage credit. On the other hand, savings life insurance grew by 9.14%, but is still 18% below 2019, largely affected by low interest rates, the rise in inflation and the macroeconomic situation.

In 2021, low interest rates have caused a series of very relevant challenges for the insurance sector, potentially affecting its positions. The consequences of this level of interest rates on assets and liabilities, on results and on reinvestments have important impacts on equity, the attraction of savings clients, and solvency in general.

The past year has also been characterized by the consolidation of several global trends that we have been observing for a few years. Firstly, there has been the strong development of sustainability. The insurance sector has maintained coverage and support for policyholders in the face of extraordinary natural phenomena such as Storm Filomena, and many companies have initiated actions to help the community, as well as support in this pandemic situation (with direct support to the medical and scientific community – such as support for the development of the Spanish vaccine) and to protect the environment.

We have also seen developments in the use of new technologies, for example:

  • Predictive data / artificial intelligence (AI). The industry relies on predictive data to manage its services, handle claims, and create personalized products. AI has begun to alter most areas of the industry (distribution, underwriting and claims), helping to increase productivity.
  • Robotics. Increasingly, and arising in part from the challenges arising during the pandemic, robotics has begun to be deployed in the sector, with the aim of improving processes. 54% of industry executives already expect their companies to use robotics by 2022.
  • The internet of things (IoT) has been gaining popularity in 2021. There are already 30 billion connected devices in the world and by 2025 that number is expected to be 41 billion. During 2021, many companies in the sector have been adopting the IoT, especially since the launch of 5G. The greatest implementation has begun to occur in sensors and portable devices for life, health and home insurance.

 

What are the key lessons Allianz Partners has learned from the pandemic (besides the importance of pandemic clauses)?

The pandemic showed us the importance of what we have, the value of time, the value of relationships, the value of life and the importance of being close to our employees and customers. But it has also helped us to understand how important it is to be prepared and be able to move as soon as possible to respond to challenges that previously could not even have crossed our minds.

During 2021, we have understood that we must be there to support our clients. For this reason, we have strengthened more than ever all the projects of active listening to the client with the aim of being able to give the best answers in the most delicate moments, but also in flexibly developing products of extreme necessity for the moment in which we have lived, such as all travel insurance products and their coverage against COVID. We know that keeping the client at the center always has a return, and if you help a client in a difficult moment, this client will thank you forever.

We have also confirmed the importance of workers and collaborators, and how important it is to take care of them. It is a priority investment because they have given their best in these difficult times and we have seen how through care and motivation we have been able to improve service levels and productivity despite the difficulties.

And yes, the pandemic has moved us to a digital world, in our personal and professional lives. We have learned that we must be digital by design, we have all had to adapt to providing services remotely, to serving customers digitally, and what we have learned is that this is possible, very possible, and we have to learn to make it coexist with the face-to-face world that we knew before.

 

What are your goals for the company as CEO of Iberia?

Our goal at Allianz Partners is to create an ecosystem of services and insurance products to take care of our clients, employees and collaborators for the future. In the last years in my responsibilities for Spain and Portugal we have put a series of actions to meet a series of clear objectives:

  • Lead the assistance market with a 100% orientation towards the client and stand out as the company with the best and highest levels of quality in the market.
  • Create a company where all our employees want to be, increasing the sense of belonging, lowering the staff turnover rate and increasing productivity levels.
  • Be absolutely a digital company, focused on simple processes and products that reach current and future customers.
  • Strongly increase business development by providing tools, knowledge and data that allow us to create products to respond to market needs and underlying trends.
  • Sustainable, equals and diverse by design in our organization.

 

These objectives should help us to be a reference in the Iberian market, to be a reference within the Allianz Group, and to double the size of our company in Spain and Portugal in only few years.

To achieve these objectives, we have carried out a multitude of initiatives and decisions in the last two years, such as increasing our investment in the development of technological tools; creating a sales, marketing and communication team with a new business plan and of communication; forming a new sustainability strategy accompanied by a sustainability committee; and building a new operational model where new AI tools help to improve the relationship with policyholders.

 

What is the current regulatory environment like in Iberia for B2B2C insurance?

The new insurance distribution regulations – which have been developed since 2020 – reinforce the need for customer information and regulate the sale of related products, in order to promote the freedom of the insured in contracting insurance.

I believe these rules favorably regulate the transparency and organization of the market through the administrative register of insurance and reinsurance distributors in which insurance brokers, supplementary insurance brokers and reinsurance brokers must register. It also professionalizes the sale of insurance, which has led companies like ours to improve the training and information available to the employees of our B-Partners.

There has also been a relevant change in the practices of combined and linked sales, establishing the obligation for the insurance distributor to inform the client, when the insurance contract is offered together with ancillary services or products.

 

Does Allianz Partners Iberia perceive much competition from insurtechs, and if so, how is the company dealing with this?

The global insurtech market beat records in 2021, with around €15 billion in investment; Europe’s insurtech market exceeds €23 billion in value. In the case of Spain, the number of insurtech projects grew by more than 50% this past year.

We as a sector are increasingly aware of the benefits of insurtechs and their current relevance in the market. Today we are not understanding this trend as a new competition, but as an opportunity to complement our current capabilities and our offering to the clients.

Insurtechs can help us complement capabilities, such as in the application of AI and robotics; they can also help us develop flexible and fully digital relationship models with our clients to facilitate onboarding via digital platforms, websites, mobile applications and others, as well as developing new business models that allow us to quickly put new products on the market with specific distribution needs.

At Allianz Partners we actively collaborate with insurtechs in our B2C and B2B2C businesses through strategic and corporate alliances with some specific ones in different geographies.

 

What specific things is Allianz Partners Iberia doing in terms of ESG?

I do believe we have to look beyond our organization and dig into what we can do for our society, for the people around us, and for our planet. The way I see our ESG approach at Allianz Partners Spain and Portugal is leading by example and helping other business units to walk on the sustainable path by being a referent.

As a company, we must keep a 100% sustainable vision for our business, not only from an environmental perspective but thinking of the financial sustainability of our company.

When I first started my role as CEO for the Iberia region in 2020, one of my first decisions was to create a Sustainability Committee to consciously work on this area and become an organization that actively contributes to our local community. During the last two years, I’ve carefully designed a sustainability strategy that serves as a referent for our international group. We offer an innovative approach based on collaborative and strategic partnerships with key non-profit organizations that have an important role within the society. These associations help us activate the four stakes we are focused on: health and wellbeing, diversity and inclusion, the environment, and support to the local and international community.

Regarding the health and wellbeing pillar, it’s important to look at the local community, but mainly towards our employees, who are the foundation of Allianz Partners. We talk about psychological support, workshops and activities with an emotional and physical focus as training for people-care. In this pillar we also count the support of some non-profit organizations as Fundación Freno al ICTUS or the Spanish Association against Cancer (AECC).

CO2 reduction is also an important objective for our company. We are working on reducing this kind of emission through our solutions portfolio and integrating some sustainable platforms as Companies for a Sustainable Mobility (Empresas por la Movilidad Sostenible) or the World Tourism Organization (UWNTO).

One of the topics that bring more satisfaction to my conviction about the impact we have as an organization in society is our action plan on Diversity and Inclusion. We fight for providing equal opportunities to all teammates, despite their gender, culture or sexual orientation. We’ve recently been recognised with the “Move” level of the EDGE [Economic Dividends for Gender Equality] certification. This achievement is an important step forward on our commitment towards our teammates, proving that we are a proactive company in equal rights for all.

As a leading assistance and insurance company, we want to be an active member in our professional sector; we belong to the EWI [Empower Women in Insurance] Network. We also believe opportunities have to be offered to everyone and sometimes it’s as simple as making differentiation and uniqueness visible; this is why we are very proud to count on two exceptional brand ambassadors, the Paralympians Sergio Garrote and Susana Rodríguez, as part of our partnership with the Spanish Paralympic Committee.

 

What challenges do you foresee for insurance companies in the coming years, and how does Allianz Partners plan to overcome them?

In 2022 we are facing several macro challenges: the rise in interest rates, higher inflation, the expected end of the pandemic (and its impact on the economy in general, especially vis-à-vis the increase in mobility and travel), the increased cost of fuel and energy, and more recently the unexpected impact on society and the economy of the recent evolution of the war in Ukraine. These aspects of absolute relevance can modify any forecast and clearly affect the evolution of all lines of insurance.

In addition, I believe that in the next few years we will find the balance between the physical and the digital, given that already more than 75% of insured users use the digital and physical world. It will be a hyper-connected future in which insurers will evolve towards a more preventive model, thanks to the possibilities of hyper-connection offered by the IoT. Data democratization models will see data become a key value to personalize products according to customer needs. There will also be a journey towards the Cloud (as a service model). Last but not least, I hope that sustainable and ethical practices will be consolidated, which will be essential to attract younger audiences.

At Allianz Partners we are working on all global levers to be able to lead the changes in the markets where we work.