In the competitive world of commercial insurance, everyone is searching for new market opportunities to grow their business - especially with UK commercial insurance expected to deliver only 4% annual compound growth up to 2027.
For AXA Commercial, it's the mid-corporate market that has presented new opportunity. Once known as an SME specialist, over the years, AXA has successfully carved out a leading role in the mid-market space and is now seeking to replicate that experience higher up the value chain.
But with the SME space saturated with capacity and more and more insurers moving into mid-market, is AXA Commercial’s move a natural progression of its existing offering or is competitor appetite pushing it out of its old stomping grounds?
“We definitely haven’t run out of road in any of the markets we’re in. When we look out to 2028, there are clear growth opportunities in each segment we operate in,” says Jon Walker, CEO of AXA Commercial.
As the XL business began integrating with the rest of the AXA Group following its 2018 acquisition, it became clear that there was a gap between the insurer’s propositions.
“We recognised that there are opportunities for us to move higher up and underwrite more complex risks, and for AXA XL to come in the opposite direction to reduce the size of the gap that existed,” he adds.
Many months of conversations and planning later, AXA Commercial now has the ability to underwrite across the commercial spectrum – from micro SMEs up to £500m turnover businesses and beyond in targeted segments such as Real Estate. AXA Commercial will also work in close collaboration with its colleagues in AXA XL to ensure holistic solutions to even bigger, more complex risks can be delivered.
That covers a huge chunk of the economy but the approach to service, and the expected level of technical expertise in this world, are a step up from that provided in the mid-market and SME spaces. In this market, it’s about more than risk transfer. Clients at this level expect a much more comprehensive level of support from their insurers that goes well beyond price.
“The risks these businesses carry are multifaceted, covering everything from property and liability to business interruption and construction, so our challenge is to build a depth of capability in terms of market segments but also in terms of the breadth of coverage,” says Jon.
And while having the right level of underwriting expertise in place is paramount, the risk management and claims services take an equally prominent role in the new proposition.
“AXA Commercial is pretty unique in that we have a large and highly experienced in-house customer risk management team, and we are bringing that capability to bear in this market. We’re expanding the team because helping clients to better manage their risk – rather than simply insuring it – is a key part of what they are looking for and what we are offering,” he says.
He points out that with multiple sites operating in a multitude of ways, mid-corporate clients want to secure an overall view of claims occurring across their business and estate and as such, data – and its analysis – becomes an incredibly valuable commodity.
“This is a much more data-led approach, but we’re investing in every aspect of this proposition. A big part of that is in people and it’s not just underwriters as we are strengthening the risk management and claims functions too.
“We aren’t just making a statement of intent here – we’re investing in and developing our people, technical capability and operations to ensure we get this right,” says Jon.
The start of AXA Commercial’s move into the mid-corporate space can be traced as far back as 2015 when AXA launched Vantage, its mid-market proposition. At the time, Jon said the move was in part prompted by other insurers moving into what was once AXA’s heartland – SME – and so to protect their income, they had to broaden their appetite upwards.
And as more insurers make the move into the mid-market space, history is repeating itself as AXA once again takes its existing expertise, enhances it, and makes it relevant to larger and more complex clients.
This isn’t necessarily new territory, but Jon concedes they are going to have to earn the trust of brokers to succeed in the long term. These are complex risks, attracting high premiums and dependent upon long term relationships, and as such, brokers are unlikely to take a punt on just any insurer when protecting their prized clients.
“We’re already successfully writing business in this space and we’re doing that through the existing capability that we have. But we want to further enhance our capability and future proof the proposition as we are in this market segment for the long term. When we developed our mid-market offering, we engaged with brokers every step of the way and we’re repeating that process with our new proposition,” he reveals.
He says some brokers see the move as a natural extension of what AXA already does and, with its scale and financial security, it’s not a huge leap to engage with the insurer on mid-corporate risks. But others, he admits, might take a bit of convincing.
“We’ll be asking brokers to give us the opportunity to demonstrate what we can bring to them and their customers and to let us do our talking on the ground, where it counts. If brokers are prepared to work with us on that basis, which I think they will, I’m confident that we can earn their trust in this market,” he says.
Being able to take feedback well and using it to improve the proposition is also paramount and the AXA team has already been on the receiving end of some. But as Jon points out, this process provides valuable insight to enhance the proposition further.
“There have been a few cases where we felt we were in prime position to win a piece of business only to lose out at the last minute. You’ve got two choices then. You either feel sorry for yourself and walk away or you take a deep breath and ask for the feedback and come back again next year.
“It’s great when you win and equally painful when you lose, but how you take that feedback and what you do with it will be the difference between winning and losing in this market,” he says.
The premium prize on offer may be large, but Jon is adamant that the move into the mid-corporate space won’t result in a reduction in appetite for mid-market or, SME business.
“We’re deliberately structured to have a dedicated team focused on each of our core segments,” he says.
“For example, the SME teams won’t take their eye off the ball as their focus is SME. They’ll collaborate with the other teams where it makes sense, but we won’t lose sight of any of the segments.”
While there’s no comparison to the premiums paid in SME versus mid-corporate, Jon’s adamant that a move up the risk scale won’t see the business lose interest in the volume business as it seeks to win in the larger, more complex customer space.
“We’ll always have the SME focus because SMEs represent over 99% of UK businesses. Why would you discard 99% of your target market to focus on the one percent? That would mean becoming a niche insurer very quickly. We’re not a niche insurer and have no intention of becoming one.
“What’s really appealing to us is that we can now provide insurance solutions and protection from the very small up to the very large and I don’t see growth in any one segment negatively impacting the other,” he says.
With the experience of launching a very successful mid-market proposition, one that others have sought to replicate in the intervening years, Jon is confident that the team can repeat the feat in the mid-corporate space. In fact, the only real risk he can see comes from within.
“Our challenge is to make sure we have the right focus, skills, governance and controls in place, and we need to make sure our underwriters have the right level of underwriting authority, in order to be responsive and make quick decisions.
“The threats become more internal as the only people who will stop us being successful are ourselves. We have to make the right decisions and make the proposition relevant and appealing to brokers and we have to make the opportunities to quote for the business that we want,” he says.
Ultimately, it’s brokers and their clients who will decide if AXA’s mid-corporate proposition is up to scratch. But Jon is confident that, in time, they’ll experience what AXA can do and trust them more and more with their most treasured clients -not just because of the brand and the scale, but because of the added value he believes AXA can bring to this part of the market.
“AXA is a huge global company with a vast amount of expertise and resource available and we can bring that to our mid-corporate clients. If they need some help on their M&A activity, for example, we have the capability within the Group to support that,” he says.
“Equally, if they are working on their ESG responsibilities, AXA Climate [a consulting arm] can be brought in to provide the expertise, insight and support they need. Regardless of where our mid-corporate partners operate in the world, or what kind of support they are looking for, as a global organisation we can source and deliver the support they need.
And it’s that, combined with our local expertise, that makes our proposition quite a bit different.”
