Asia must strive to discover the ‘real substance of risk management’

While very few would argue that managing insurance is an art form, Ulrich Guntram has undoubtedly made the management of art insurance a very serious business for AXA in recent years.

He assumed responsibility for AXA’s art insurance business in 2001, taking it from a “tiny loss-producing niche player”, as he puts it, to a leader in its field.

But times have changed for Guntram, who in April took on the challenge of running the Asian operations of AXA Corporate Solutions, the insurer’s entity dedicated to risk management, risk transfer and claims handling for large corporations.

What at first glance appears to be quite a leftfield move is more of a logical step, according to Guntram.

“AXA Corporate Solutions and AXA ART are both global specialty providers with a customer segment focus within the AXA world,” he told SR.

“Our two companies have a lot of similarities, and with my AXA ART colleagues with whom I am still very close, strategically, I think, we can learn and even share a lot from and with each other.

Nevertheless, there is no doubt that the move represents a big cultural and personal shift for the German art aficionado.

“With AXA ART, I was travelling from time to time to Shanghai, Beijing, Hong Kong and Singapore, but now really it’s the first time for me living in Asia, so I’m really overwhelmed first by the dynamics,” he said.

“If I look down from the tower where my office is, in front of me is the container harbour of Singapore, so I always have a ‘real-time view’ of the vitality and the power of the economy here.

“Some of the regional large companies are growing horrendously at an incredible speed – 30-40% for electronic firms, telecommunication providers and some consumer good companies – and the indirect functions face difficulties keeping pace with this, including risk management.”

Guntram said that while more risk managers were “being established on board level”, there was still much development required in risk management at an enterprise level.

“It’s interesting for me to observe here that there is a hype about risk management,” he said.

“I do think we have to give this topic high priority and visibility, it’s just that we have to look behind the headlines and PowerPoint presentations to find the real substance of risk management.”

Diversity and inclusion

Another thing that Guntram said had made an immediate impression was the sheer diversity of Asia.

“In Europe and other parts of the word we are launching various programmes for diversity and inclusion; here diversity is the reality,” he said.

“But the challenge on the inclusion side is even greater here than elsewhere in the world because, particularly in our business sphere, you want to accelerate and get maximum speed so you are tempted to fly in expatriates like myself and fill management positions with people from overseas.

“We really have to raise local people to a level of high competence where they can take over management positions.”

To this end, Guntram is employing a strategy that he calls a “smart mix of going local on the one hand and adapting to local circumstances, and on the other hand leveraging the global strength of our group”.

“To give you an example of how that works, we here at AXA Corporate Solutions are collaborating with our big sister AXA General Insurance in a complementary manner,” he said.

“Wherever we can, we do this; for example, in Thailand where we don’t have a licence ourselves, and in countries where AXA is not present at all, like Korea where we have a strategic partnership with Samsung.

“In Indonesia, it’s a different model again; there, AXA has a joint venture with Mandiri Bank and we are again collaborating on this joint venture.”

There are different levels of development and regulation in each geographic market, Guntram said, “and our business set-up varies from market to market, giving us a very high flexibility and adaptability to really get the most out of the market potential”.

Growth rethink

AXA’s position as one of the leading high-tech insurers in the region was causing a rethink the way it should grow in Asia, Guntram said.

“For example, we can’t grow much more in Taiwan because we are already exposed to most high-tech producers there, and given the huge natural catastrophe – particularly earthquake – exposure there, we are really handicapped to further grow. We are also already insuring several major high-tech companies in Mainland China and Korea,” he said.

“However, power generation is one of AXA Corporate Solutions’ strengths, not only here in Asia but also in Europe, and that’s good because as these economies are growing, it comes along with a development in energy supply, particularly electricity. This is good for us because we have strong capabilities there and we are constantly upgrading our offer and risk management in that regard.

“I would also add we have made strong progress in marine, hull and cargo, the cement industry, which again is a booming sector over here, and we are a good partner for the automotive industry, particularly in mainland China.”

AXA is also considering extending its offerings in the infrastructure project sphere, but Guntram is wary of the risks.

“The biggest challenge in the region is natural catastrophes, natural hazards such as earthquake, typhoon, wind storm and flood, and we have been reluctant in the past whenever infrastructure projects went underground, tunnels for example,” he said.

“But this is something that we are constantly reviewing and considering whether we can extend our services.”

Risk assessment

The firm’s ability to effectively assess such risks was enhanced by the purchase in 2007 of AXA MATRIX Risk Consultants, which Guntram said he was now using “hugely in the underwriting process”.

“More and more I am also using them in claims handling, which is where pretty often you can make a big difference if you have an engineer who can mitigate a risk or come up with how it can be contained,” he added.

Everyone needed to have realistic expectations of risk management maturity in the region, Guntram said.

“If we look back at how risk management evolved in our so-called mature markets it wasn’t there the first day,” he pointed out.

“We should not forget that a lot of that was driven by regulation. It is not always that wise executives are thinking about those things, sometimes they need a gentle push by regulators and therefore it is very important to observe how the different governments are picking up these issues.”

Expectations at AXA’s headquarters also needed to be managed well, Guntram said.

“In my job I have to do some expectation management back home to our head offices what the size and particularly the growth of these markets here is really all about,” he explained.

“Whether it’s Singapore, Hong Kong or other metropolitan areas in Asia, they are flooded with insurers, with capital, with capacity. The market over here is at least as soft as it is in London, and the idea that you can just grow 20-30% is maybe a bit of a misconception, particularly in the corporate business.”

Nevertheless, Guntram said he was confident that the combined forces of AXA General Insurance and AXA Corporate Solutions had “all the building blocks to serve the small SME up to the large multinational corporation, the whole spectrum”.

“This is something that we haven’t done in a very systematic way; we have been more opportunistic in the past and here both AXA General Insurance and AXA Corporate Solutions are willing to jointly penetrate the upper market.

“All this together I hope will give us above-market-average growth.”