AXA SA (CS) Earnings Call Transcript & Summary

Hello, everyone, and welcome to AXA's Future Fest. My name is Anette Burgdorf. I'm a French-German journalist, and I'm very happy and honored to be the moderator of this live event. So thank you for joining this live webinar that AXA has organized in the context of the Future Fest. So in this third edition of AXA's Learning Week, the focus of this festival of learning is tech and data and its impact on the future of your business. So our topic today is the future of insurance and how our tech and data are reshaping the insurance sector. The open learning event is designed to explore how AXA, and I would say the insurance sector as a global, is transforming itself leveraging on new technologies and data. So how does it go? I'm in a studio here in Paris. I'm alone. I'm missing you, I can say. And you, all the speakers, are connected with us and you, everybody, here listening to us. I will first interview my guests during 40 minutes, and you can ask your questions whenever you want on the website, axa.com, during the live. And you can win as well prizes. Just look please now at the screen to know how it works and what you can win. So sorry, but only AXA employees can win prices, but anyone can ask questions. As you might know, at AXA, it is important to contribute to digital sustainability and to raise awareness on the environmental impact generated by the digital information systems, services and infrastructures. That's why by winning prizes, you will contribute to neutralize the carbon footprint generated during the event by planting the future digital-first in collaboration with Treedom. And now it's time to introduce my 3 international speakers. So we are connected with Romana Ibrahim. She is CEO and Co-Founder of Keep Warranty, a highly successful application that enables to choose insurance cover with digital technology. Romana is an ambassador in Angola for Women in Tech. And Women in Tech is an international organization helping women to embrace tech. She was also named Founder of the Year 2018 by Women in Tech. And Romana, she's also a partner in Smart Consult, a cyber security company. And she's also an international speaker at technology and high finance forums. So hello, Romana, who is connected with us from Angola, Luanda. Hello.

Thank you. Thank you, Anette, for your introduction. It's a pleasure to be here with you. And yes, I am in Luanda, Angola, with you all over -- from all over the world.

Right. So from Angola to Germany now with Thilo Schumacher. Thilo is the Head at -- of Health at AXA Konzern in Germany. He has been a member of the Board of Directors of AXA Germany since 2012, first, for the Strategy and Organization division and since the beginning of 2015 for Health Insurance. He joined AXA Germany in 2006 in the sales department and was head of this department for 2 years. [Foreign Language]

Yes. Good morning. Good morning, everybody, from Germany. So we have spoken to each other before. I can offer you a gray weather, but I'll not show you. So let's concentrate on the seminar, the webinar, and I'm looking forward to that.

Thank you, Thilo. Last but not least, Hassan El-Shabrawishi from Egypt. So Hassan is multi-entrepreneur. He is today CEO of AXA Africa Health and Strategic Development Officer for Africa since January 2018. Hassan was previously the Chief Innovation Officer for AXA Group and CEO and Founder of AXA Next, dedicated for business model innovation. In 2016, he was selected as one of the Top 10 Economic Young Leaders in Africa by Institut Choiseul. And today, Hassan is developing AXA's health care delivery arm in Africa and leading health services across emerging markets. Hello, Hassan.

Hello, Anette. A pleasure to be with you and a pleasure to be with the great speakers we have today. I look forward to this panel, to this exciting discussion. Thank you.

So great. Thank you again. Thank you very much for being us -- with us today. So I suggest, before we deep -- we dive deep into the topic of how tech and data reshape the insurance sector, let's perhaps first define the terms, what is behind tech and data so that everybody understands what it is all about. Because I think we are not all experts. So what is tech and data applied today in insurance? And in a nutshell, what is it for? Romana, perhaps would you like to start?

Sure. Thank you. Well, tech and data, they have a presence. They will be the future. That's a no-brainer for all of us in all the areas that we enter. Now we will apply them, and we are applying them in the insurance area to make sure that the insurance makes part of everybody's life every day that we use it in a constant way, very easy and fast way as well.

Okay. Romana, perhaps, Hassan and Thilo, to go in more details, tech and data, what is it for? Is it just to create new insurance business models or new products to maximize efficiency? What do you think? Hello, Hassan?

I think, Anette, maybe to add on what Romana said, I mean, to make the lives of people easier every day, I think the session or the idea of tech and data should open our minds on the amount of opportunities we have in this industry with the availability of new technology, things that we would not have been able to do before that we're now able to do because your customers are now expecting for us an Amazon experience in the way they interact with us. And I believe that we should be very open as an industry to see how can we embrace these new technologies in changing all what you said, I mean, in changing our business model, but also in changing our current model and improving it so that we can face new needs from customers, and we can actually solve more pain points that we're not able to solve in the past. So for me, tech and data, in summary, is an opportunity for our industry to rejuvenate itself and meet new customer needs.

Yes. Okay. What I understand from you is this is really to improve customer services, to be -- to deliver better services. It can change business models. What do you think, Thilo, about mitigate insurance risks?

Yes. Maybe talking about data, the data is nothing new for us. So I actually work with data for a lot of years. But what is different now and will be much more different in the future is the amount of data, the availability of data and the accuracy and agility of data. And the technology, and this is where tech comes into play, that we can combine our data with what we have in our systems coming from our history with external data to increase predictability and accuracy of pricing on services and so on. But for me, the main thing, and then I come to your question regarding risk, the main thing is that tech and data helps us to focus the expensive human being interactions so that people talk to each other that we can talk to our clients to situations where they really matter. And there's always a question, "Okay, is tech and data the end of insurance employees?" I would say definitely not. The role might a little bit change, but human being as part of insurance is still the core because there's other situations where it matters whether you talk to a machine or talk to human being. On risk side, of course, I mean, we talk about cyber risk. We talk about health demand increase. There's a lot of things we might cover during webinar, which, of course, has a big impact of our future business, and we need to be very careful and need to manage that in order to remain relevant and to keep the situation where customer can afford the insurance cost.

Okay. So you think that tech and data is a tool or is a mean to improve services. Just perhaps, Hassan and Romana, one precise example of data and tech in the insurance industry today.

Well, we use people to better understand...

To better understand the definition of tech and data, very precise.

Well, in terms of technology itself, it varies from artificial intelligence from machine learning, deep learning, the combination of all these sciences and the way we produce new innovative ways of giving people products that will give them a new way of how insurance is. In the way we were born in a decade ago, we would contract insurance with paper and amount of paper. And nowadays, we have new ways of doing of the same. And what we are doing in the next years, we try to evolve this base technology.

Okay. Hassan, would you like to -- okay. Any precise example illustrating the importance or what is tech and data today in insurance sector?

Of course. So being in Africa, agriculture remains to be a huge part of our economies. And when you take a potential weather changes and the impact on this on farmers, pricing risk was extremely difficult in the past given that data was very limited and not very particular or specific on specific areas. Today, we have a whole team working on what we call parametric insurance, which is bringing weather data, being able to mix it with a specific piece of land and knowing exactly the risk profile of that piece of land in a much more accurate way than in the past. This allows us to price risk better, allow much, much more farmers or even societies to manage their risks better. And then we were being able to be better protected against those risks with prices that wouldn't have imagined, I would say, a few years ago, I wouldn't even talk 10 years ago, I would say, a few years ago. So that makes data more precise. Pricing that is better for them, and then we can protect more people then.

Okay. Thank you. I think we better understand what is behind these terms. Now looking ahead to the next 10 years, it means it's very large -- or 5 years, what do you think will be the major changes in the year? Do you think that insurance will still exist as we know today? Thilo, you mentioned risks. What do you see -- what kind of new risks do you see?

The question -- Anette, as you ask -- that you asked was will insurance exist, will remain? The answer is yes. Because now there are so many risks which an individual or a company can never fully cover. And I would like to give you an example which exists then, these kind of treatments will increase in the near future. So a lot of you have probably heard about ZOLGENSMA. ZOLGENSMA is a very powerful medication, but it costs about EUR 2 million per treatment, EUR 2 million per treatment, but it does heal spinal muscular atrophy. So just imagine, you need to pay that from your private wealth. I would say, probably for all of us, it's important to pay. But for a group or for society, let's say, or a company who covers a lot of people, this is possible. And I think insurance matters in a situation where an individual cannot cover a specific risk, but the group can. So this will remain. This will not change at all. The question for me is on regarding insurance, will only insurance companies like big ones, like us, like AXA, will remain? Or what about peer-to-peer insurance? What about more capital, what we see? And the only way we can stay relevant is that we do more than just paying the claims. And the health space, but also the P&C space, I think, prevention is much more relevant in the future that people see -- our customers sees the relevance that they don't only have an insurance cover that if something happens, we pay, but we support the customer because nobody opts for a claim. And let's say, to find if something just breaks for the [ best ] craftsman on a health insurance, find the best doctor. The next best offer, not only insurance cover, but next best offer regarding services. And we can do that. If we use all the data that we currently already have, but with the data which is externally available, to combine that and to do that and be more relevant for the future, this is, I think, highly relevant. And then it's not a question whether insurance will remain. It definitely will remain, but also insurance like today, if we change, will remain.

Of course, insurance will remain. But how? How will the business model evolve? And perhaps, Romana, if you would like to add something about -- do you think that insurance will have the same role as it has today?

Well, insurance is evolving. And picking up what Thilo was mentioning, the relevancy that it has for people, whenever we are contracting an insurance, we -- our aim is never to claim it. We hope never to claim it because that's never a good sign. But we want to have the trust from the insurance company that they will be there for us and they are offering the best service that is there for us and it was made for us. And that's what the future is bringing us. The products that are more and more made for the needs that me, Romana, have or that you, Anette, have according to your habits, according to Thilo's habits, according to Hassan's habits, and that's where the insurance industry will make the big difference in the forwarding years.

I can see, Hassan, that you're moving your head yes. So do you agree with Romana, Hassan? And how do you see future competitors, for example, challenging the insurance sector?

So no, I fully agree with what Thilo and Romana mentioned. I mean the future of insurance will remain, but will remain more on being more service-driven, where even risk will become a by-product of the service, and the service itself would be what people are procuring or buying. The fact of only buying risk will completely disappear, and both Thilo and Romana spoke about this, and I fully agree with that. On your other question of competitors, Anette, I mean, today, our competitors are not the traditional ones that we have. I mean, insurance is even sold on a more, what I call, embedded basis than before. Many of us will buy an AppleCare or an Amazon Prime. All of these are new forms of insurance that are very different than the ones that we knew of today, not even being labeled as insurance, but you're still buying them. And I think the future will not be -- it's not about buying an insurance policy as we know it today. It is forms of protection that is much better embedded within a customer experience that meets much more specific needs. And that will be the future of insurance, not only the regulatory insurance, but I would say the demand-driven insurance. And our competitors are some of the names I've mentioned, where at least, in AXA, we don't see them anymore as competitor. We see them as potential partners where we actually can work with them so that we can offer them our knowledge with their customer experience, and we can offer them an embedded journey so that we can have basically better service as we discussed in the first part of the call.

Okay. So what I understand, you see this T&D is really an opportunity for the insurance sector. Do you see any other opportunities? For example, concerning collaboration with external actors of this ecosystem or what else? What could you see as an opportunity?

Anette, I think Hassan mentioned a very important point, that he says he said the competitors are not insurers, are others. And we need to learn to collaborate, to partner with our main competitor of the past because they're not the main competitor of the future. And for example, in Germany, we've built a platform where we've combined 50% of the private health insurance market as a joint platform. Every one of us or every insurance company owns a share of it. I'm sitting, building a platform against the Amazon and Googles of this world together with some main competitors. Of course, we compete on new business, but you do not compete on services. Because on the services side, we're all very, very small. And we have to build a relevant scale to be able to compete against Amazon, Google, Apple or the others. And this is, I think, what we have to learn. If we don't do that. We don't adapt, we will be dead. And I completely agree what Hassan has said on that.

Romana, would you like to add -- or I would like to ask you more question about the risk. How do you -- do you see the risks? Because we mentioned there you have to handle a tremendous amount of data. Okay. And this is, I think, a very tricky part because do you see any special issues that insurance companies should consider in the area of data, privacy and cybersecurity? Thilo mentioned cybersecurity issues. So how do you see this?

Well, the security and the cybersecurity area is a very important one and mainly in the insurance industry where we collect so much information about people. And because like information from many areas since house and many more, it is very important to have these areas all very organized and very protected. And these come, of course, from the main offices and how they are controlled with -- and the partnerships that they have with cybersecurity companies that provide them the services. But there is one thing that is cybersecurity services and how an insurance company is protecting the information of their clients. And another thing is how they use the data of their clients in order to provide their clients a better service. And sometimes, Anette, there is a big misunderstanding between the 2 things. And it is very important that we explain to everyone that if we don't use people's data, we can never give them a better service. And using people data does not mean that we are providing their data to other players. It means that we are using their data internally to understand what they are doing, to understand what are their habits, to understand what are their needs and to make sure that we are creating better products that are adjusted to what our -- that would fit them the best way.

Of course, I understand. But for example, if you use data, if the patient is transparent, there is a need of trust in this partnership between a patient or between the client and between the company.

There is. There is. But most of all, I will need to go back, Anette, what is wrong in this set and in this road map of information is the way the information goes to people. And in this world of information that goes from everywhere and is everywhere is exactly that people do not understand this and the information is not passed correctly. And this is so important. Because when people think about data protection, they immediately say, "Okay. I don't want anyone to use my data." And that's it. But the moment they understand they will not have any better service if I don't have a usage of the data, immediately, they will say, "No, but I want that." Because it means that I will take advantage of it. So it is very important to give people an important message of what is the privacy of their data, meaning I'm not using their data to other companies and providing that data to other companies, selling their data, securing the data in terms of the company itself and using the data to provide, to create new products according to their needs.

Okay. Hassan, do you think that the topic of data ethics is the same everywhere in the world? Or how do you see this in your area? You're in Egypt, but you're responsible for ex Africa?

No. I think it's very different. I think Europeans are much more sensitive when it comes to the data privacy than I would say Africa or Asia from what I've seen and from the discussions I have with several clients. But what I've seen in common and all of -- everyone is exactly what Romana mentioned. I mean people want a trustful service-based on the data they provide you with. And if they get a benefit out of it, then they're happy to share their data, and they even share more data than what you expect because the owner of data is the client. And when you know that each and every person owns their data, no one else but them, because there is a whole governance and ethics to your question around data. And I always tell people, it's the customer who owns their data. They use it as they want to, and they get benefit from it as they want to. I put my address on Google Maps, and many people in Africa because we have a big issue of traffic in Africa and especially in cosmopolitan big urban cities like Cairo or where you really have big numbers of people. And we all put our work address. We put our home address voluntarily because Google provide me with a faster way to reach my destination by avoiding traffic. Here, I think I share my data because I get a benefit out of it. And this is exactly what the relationship should evolve in the future. But to your point, yes, I mean, not all regions are as sensitive to data privacy as it is the case in France, for example.

I mean, yes, we have -- in France and in Europe, we have the GDPR, and we have to comply with that. So I would like -- because you mentioned already the health sector, which is really, I think, the sector, which is one of the most impacted sectors by tech and data in recent years, just when we look at some key figures of teleconsultations really exploded during the lockdown, and it has become really part of our daily life. So I think this is really a strategic issue for the insurance industry. So my question, Thilo, perhaps, if you would like to start, how is will health being transformed by tech and data? Yes. How will this -- how will health care be transformed?

I think, for me, the most impressive example is when you think about illnesses and diseases, there are about more than 30,000 diseases existing. And of the 30,000, about 8,000 to 9,000 are orphan diseases. And the normal doctors might see -- normal GP might see about 1,000 during his career, maybe 1,500. So the probability that if you have not a normal flu, that you get the incorrect treatment is significant. And here, I think the beauty of tech and data comes into play, not to replace the doctor, but to support the doctor to help him to find out what is the real issue, what is the real illness and disease and what is the best treatment. And in the old world, and we are still in this old world, is we go to the doctors and we expect that the doctor knows everything what he needs to know to treat me perfectly. And there's another number, which says about only 5% of a specific theme complex within the medical space can be adopted by a human being doctor and 95% is somewhere else. So as you go in a database, but it's never been received by the doctor. And we need to support the health care treatment by AI, by data and tech. The only way we can do that is to bring the data sources together. Because today, of course, every kind of medical data is stored somewhere. Different data standards, different places. They are not connected to each other. They're not able to communicate to each other. And we have to bring that together in order to improve delivery of health care. And this improvement has 2 impacts. First, it will be improve the quality to deliver health care. On the other hand, it's the risk for the insurance side because these -- the question is, what -- is now if we pay for the medical outcome, do we need to pay more? Will it be more expensive? And will the demand not only increase, but also supply? Today, the doctor works per dollar...

There is a risk -- there is a questioning, who is responsible? When a diagnosis has been made by artificial intelligence, who is responsible for that? There is a question of responsibility.

Exactly. So it depends country by country. In some countries, it's a digital kind of a medical asset. It's the same law applies like for a pharmaceutical pill. So that's why you, as a provider, liable for that. But my point is, first of all, I think it should be a supporting instrument for the doctor so that the doctor remains reliable for the kind of treatment, but it gets support by tech and data. And this is, I think, the key driver. Because I mentioned at the beginning, we need to focus to concentrate the human being actions to things that really matters. So at least, at the end, the doctor should decide today. Maybe in 5 or 10 years, it will be different. But today, that's the case. But he needs to get the support from all the sources, which are theoretically available, but today not. That's, I think, one of the major driver, things will change in the future.

And Hassan, what do you think about this support of artificial intelligence in the diagnosis? How do you see these challenges? What is doing in T&D in the health care sector?

Look, I mean, this is an industry that I'm now managing health care delivery in Africa, as you've mentioned in the beginning. So I will answer you in a very structured manner. So I'm extremely proud of my team in AXA Next because we have dedicated medical doctors that ask exactly the same question. What was -- how will the health care transform in the future and not to make it subjective because these answers could be very subjective. We developed a very structured approach to look at what are the technologies there. When we looked at nanotechnology, we looked at robotics in operations that should be done in a much more precise way. We looked at 5G. We looked at all of this and we chose basically 3 main technologies that will change the future based on 3 criteria. The first one is, what is the extent of it becoming real? How is it going to be accessible to the people in reality? And what is the potential impact on people and health care? And we've summarized this into 3 main ones. One is health trackers, wearables that are today available everywhere. You can do an ECG. You can -- all of us have trackers, Apple Watch that take much more vital sciences than you could ever imagine. And it's evolving very, very quickly. Artificial intelligence, as Thilo mentioned, and I would say genome sequencing. And we try to really make a difference between what is really science fiction and what is real today. So we started by creating a digital health team fully dedicated to looking at wearables, and this is why I changed my background. So just behind you. I'm sitting in one of the clinics that we have here in Cairo. And just behind me, there is something called health pod, this box that you see, this digital box that you see. This is -- a client can enter this without meeting any physical doctor. A screen will open. They will be able to take vital sciences on their own with a glucometer, a blood pressure device, connected blood pressure device and ECG, breath, respiration. So this is actually happening where all of these vital sciences are being taken live without even seeing the customer. And in the past, you have to go to a hospital when you need care. Now the patient is the point of care. And we believe that -- imagine the future where all of this data will be better used for the benefit of the customer. It will completely transform how health care is being provided in a much more accurate way than today. So I hope I give you concrete example on this.

Great. Thank you, Hassan. And Romana, let's focus on the customer. We mentioned many times the customer. How do we think T&D is impacting the customers' expectations and experience?

Well, it's impacting totally. We can go back to March when the pandemic started or when our life started changing with the pandemic with COVID-19. And all of a sudden, online appointments with doctors were available. And this just happened and this ability just happened because the technology was there and because everybody was so fast adapting to technology. And the data they -- was also available to be there. And every time I was connecting with my doctor or whatever doctor was there to consult me, he had my data. So things were happening and things happened. And now they are happening even faster. At Keep Warranty, for instance, in our app, we just developed a new insurance that we will release in a few weeks for people with -- that might have cancer just because of the employment-related debt went very up in the last month. And because it's one of people's worries that they might have cancer and the costs that they have with cancer because they're also very, very high. And they are not concentrating in the treatment itself because we have a national support in terms of the disease itself. But giving people some money that they can use for other treatments for the cost that they will have in their daily life in case this happened. So bringing up new products, bringing up new solutions for people in a fast way is exactly what people are expecting. And it's exactly what we, as providers of new services, need to do as fast as possible. And it's -- that's something that we can only do when start-ups are working with insurance companies, with the reinsurance groups, in a constant way. Otherwise, alone, we can't do anything.

Okay. Focusing on younger generations, generations that, for example, their service expectations are real-time, personalized services, trusted, secure. Do you think that T&D can really help you to meet these expectations? Thilo or Romana, yes?