Focused and future-ready

Focused and future-ready

Axa XL has a new local chief, and refreshed growth ambitions for Australia

By John Deex

Giant global insurer Axa XL’s commitment to Australia hasn’t faltered – but like many of its peers it’s gone through a period of remediation as the market hardened and catastrophes piled up.

Now it’s looking ahead with optimism, with new local leadership in place and greater recognition within the Axa Group.

After a recent change, Australia reports into the Asia-Pacific and Europe business unit, and it’s the third largest country within that unit in terms of gross written premium, behind France and Germany.

Last year former Australia country head Robin Johnson left the business, and regional leader APAC Craig Langham is also moving on.

Former head of claims APAC Catherine Carlyon has now taken control of local operations, starting on August 1 as Country Manager Australia.

Ms Carlyon believes her strong claims background and international experience stands her in good stead, and she sees a wealth of opportunity ahead.

The local operation, with its 170-strong team, is critical to Axa XL’s multi-national programs, but there’s a strong producing office too.

“Our most significant lines are property casualty and financial lines, but we’ve got a growing presence in the marine business here,” she tells Insurance News.

“And then a whole suite of specialty lines, including things like political risk and trade credit, fine arts, business continuity and other crisis management lines.

“We have started to offer things like parametric insurance, where we’re able to pull in products that have originally started elsewhere within Axa, but we’re able to offer them now within Australia.”

Axa XL also owns the Brooklyn Underwriting agency, and provides capacity for other agencies too, giving access to the SME market above and beyond its traditional corporate focus.

Following several years of rapid growth with a “top line focus”, Ms Carlyon describes the current insurance environment as “challenging”, even though the hard market “is possibly tapering a bit”.

There has been significant remediation within the property and financial lines portfolios, and Axa XL also withdrew from its private client ultra-high-net worth business, but now the company is in a position to move forwards.

“It has been challenging – whether it’s bushfire, hailstorm, COVID with the non-damage business interruption test cases ongoing, the class action environment, tightening regulations, all of that.

“It’s been tough conditions but we focused on making changes to those product lines – probably not too dissimilar to many of our peers as well.”

Ms Carlyon does not shy away from tough decisions, with delivering on profit and loss now her responsibility. But she notes that neither brokers nor customers like uncertainty.

Optimistic outlook: Axa XL's Catherine Carlyon

“P&L is my remit and we will have to continue to look at making sure that we’re driving that going forward.

“But one of the things that I’m also very aware of is that nobody likes any surprises.

“It’s important that we build out real partnerships with our brokers and make sure that whatever we’re doing we’re talking about it – that we’re operating in a way that puts our joint customer first.

“Ultimately, I think that’s how we’re going to get success in the longer term.”

With most remediation now completed, there are new opportunities for growth in many areas.

“I would say, with both property and financial lines, we’ve done the bulk of the hard work to get the portfolio where it needs to be,” Ms Carlyon says.

“Financial lines is one of the areas where we’ve really come through what I think has been a hard remediation cycle for everybody. We have a lot more confidence in terms of where we’re at.

“So we’re not looking at retreating.”

In marine, Axa XL’s relatively small portfolio is packed with potential.

“That’s an area we’d like to see grow out within the market. The Brooklyn branding for us is also an area where we’re looking to grow because that brand focuses more on our SME market space.

“When we look at our portfolio candidly, we’ve been doing some work to make sure that we’re reducing the volatility and increasing profitability. In order to balance those pieces out, the portfolio growth in that SME space makes sense for us.”

Cyber is also a product where Axa XL sees growth, although Ms Carlyon notes that it’s “under a lot of scrutiny”.

Some Australian politicians are urging insurers to stop reimbursing companies for ransomware payments, to prevent funding criminal enterprises.

Axa France, which is a separate division to Axa XL within the Axa Group, announced earlier this year it will stop offering ransomware coverage when underwriting new cyber policies.

Axa XL continues to offer ransomware reimbursement as part of broader cyber policies, but the company says it will “monitor the evolving regulatory environment”.

While cyber is not one of Axa XL’s most significant lines in Australia, it has specialists within the team and sees a strong future for the product, despite rising claims and the ongoing scrutiny.

“We’ve had a project internally recently that’s been looking at the policies and limits on what we have within the cyber space,” Ms Carlyon says.

“[The scrutiny] is something that we’ve been focused on as well, to make sure our cyber offering is fit for purpose and that we’re approaching it with the right ethical view.”

Parametric insurance – where cover responds to a pre-agreed weather trigger, such as wind speed – is something Axa XL can offer by tapping into support from Axa Climate and the broader Axa Group.

“It’s a pretty small portfolio for us in Australia,” Ms Carlyon says.

“But as we have more extremes in terms of climate, I think it’s a good product offering to have out there.

“I see that there’s growth – in terms of how much growth, that’s going to be an interesting one to see – but I definitely think it’s a valuable product to have.”

Ms Carlyon says the hard market is affecting Axa XL’s larger corporate clients but, in contrast to the SME space, it’s less about affordability and more about the structure of insurance and risk management programs.

She says there’s a growing tendency to use captive insurance companies – whereby a parent company sets up an insurance company to provide coverage for itself.

“With the larger corporate clients it’s about trying to craft creative solutions. I mentioned things like captives and looking at how the insurance programs are structured. That’s something that we work with our brokers and clients on as well.

“We have to make sure that we offer products that make sense to our clients at the end of the day. Otherwise, they’re no help to anybody.”

While Ms Carlyon believes her company, and industry, has responded well to the COVID-19 pandemic, she accepts that the business interruption court battles don’t look good from a consumer’s perspective.

Axa XL has some exposure to the issues being fought out in the second industry test case, so the upcoming Federal Court ruling – which will almost certainly be appealed – will have an impact.

“I think the industry has done well coming together and making sure that we’ve been sharing experiences and taking the approach that makes sense. We are striving to try to make sure that we’re ending in the right spot for our clients.

“But if I take a step back, as an industry, I would say we could do better.

“If all of the decisions went against insurers, including some of the issues that have been looked at outside of the test cases on some of the more significant cases, I don’t think we’d have much of an industry left.

“But it feels like it’s taken us too long. It’s difficult because it’s tied up with the courts and the court timeline. There are things that are out of our control and it’s a very complex question that’s being unpicked.

“Sometimes I feel like insurance is an easy target for people to push things towards, or to blame. But I do think possibly there are some lessons learned along the way, to think about what we could do better.”

Another concern around COVID is the impact it has on access to talent. With borders still closed, Ms Carlyon says “good talent is hard to come by”.

“You just have to be in our office and listen to the number of English accents to know how much of the insurance talent gets imported from elsewhere,” she says.

“Being less movement internationally, it has played a part and it has increased the competition for talent.

“There is a generation that’s retiring or about to retire. I think we’re starting to rally around a little bit pulling some of the younger generation but we’ve got a bit of a gap in the middle section.”

Axa XL has been a key supporter of the Lloyd’s organised Dive In Festival, and Ms Carlyon is keen to push the importance of inclusion.

Because if a company is genuinely inclusive, she believes diversity will follow.

“When I look at our gender diversity, we probably mirror what happens in the rest of our industry, in that we do have quite a good gender diversity when you look at the overall population, but the higher up you get in the organisation that gender diversity is not so equal.

“But, for me, the most important thing is inclusion. On the back of the first Dive In event that we had here, I was one of the people that started our inclusion committee in Australia.

“And it was actually important for me that we didn’t focus just on gender. And when we talk about gender, we don’t just talk about women.

“I would much rather talk about what some of the underlying issues are and what we can do to move things forward – whether it’s flexible working, parental leave, and making sure that we’re approaching this with that inclusive mindset rather than putting the focus solely on women, which can be divisive.”

Ms Carlyon sees her ability to promote the Australian business and its potential enhanced by the structural changes that accompanied her appointment.

A “conscious uncoupling” of Australia from Asia, as she puts it, and the fact that it now reports directly into the business unit, gives it a clearer voice.

“That gives us the ability to internally share the position of the company in Australia, to really give them a better understanding of where we are.

“That’s one of the things that I really do see that we get as a benefit from reporting directly into the business unit.

“There’s no question or any doubt of the company’s commitment to Australia as a geography and a jurisdiction.”

Bees and biodiversity

Ms Carlyon – like so many others – came to insurance in a round-about way but in Axa XL finds herself at a company that shares her passion for the environment.

Axa Chief Executive Thomas Buberl has been a trail-blazer with the company’s climate strategy and strict protocols outlawing cover for new coal projects.

Ms Carlyon, who hails from Bristol in the UK, studied biology at university but then joined KPMG as a trainee chartered accountant.

She specialised in financial services and came to Sydney in 1999, where she met her husband. Then it was on to Chicago and London, and XL Group, as it was then, became a key client before offering her a job in 2006.

But she never lost interest in the natural world. “I’m very proud of the climate stance that we take, and I’m very supportive of it,” she tells Insurance News.

“I think it’s important that we hold ourselves accountable going forward and I’m quite passionate about making sure, for example, that we retain biodiversity. I keep bees in my back garden.

“So, I’m fully supportive of our stance that we have on climate change. It’s something that within Axa XL we’re going to be asked to take more of a local ownership of going forward as well, to make sure that we’re taking our group policies and group stance and converting that into something that really makes sense for our local market.”

Bee happy: Ms Carlyon has a passion for biodiversity

As for coal mining and associated industries, Ms Carlyon understands the frustration at not being able to access finance or insurance. And she says it can sometimes be complex as to where an insurer draws the line.

“We have quite a strict internal referral process on that to make sure that we are applying the right mindset to underwriting risks,” she says.

“Everybody has a unique perspective and it’s an issue I know that the coal mining industry is grappling with.

“But our stance as an insurance company is to protect what matters and to move the world forward.

“I’m comfortable with and proud of that.”