Leaving a legacy

On march 10, Insurance Business broke the news that Niran Peiris, managing director of Allianz Australia, has been appointed to the board of management of the global Allianz Group, effective from 1 January 2018.

It was announced that Peiris, who has been with Allianz Australia for 16 years, will assume responsibility for the property and casualty businesses in the group’s Anglo markets (which include Australia and New Zealand), the Global Insurance Lines (for example, Allianz Global Corporate and Specialty), Russia and the group’s commitment to environment, social and governance. According to Allianz, work has commenced appointing his successor in Australia, with Peiris to continue in his current role until the end of the year.

Insurance Business had the good fortune to meet Peiris in his Sydney office to discuss Allianz Australia’s recent progress. Reflecting on major wins for the business, he cites the 2014 acquisition of the general insurance business of the Territory Insurance Office from the Northern Territory government, as well as Allianz’s partnership with Westpac General Insurance in 2015, under which the bank began sourcing products from the insurance giant.

Additionally, Peiris mentions the opening of the South Australian CTP market, at which time Allianz became one of four CTP insurance providers in the state. 

He also discusses the biggest challenges the business is facing in the Australian market right now. He refers firstly to the soft state of the commercial market.

“While it’s recovering, I don’t see it recovering quickly, and I think that’s an indicator of capacity that we have around the world,” he says.

“Secondly, I think low interest rates continue to be challenging for any financial services organisation, particularly general insurers because you’ve got to price to your interest rates, and when interest rates are very low, of course, your price has to be much higher than you otherwise would have. 

“I think that’s a pressure on us all, and we don’t see interest rates moving up dramatically in the near future, and so that pricing pressure will remain.”

The regulatory landscape is also an important factor to Peiris.

“I think the move of regulators, particularly towards customer advocacy, is a big change and something that I think the whole financial services industry is adapting to at the moment,” he says.

Tomorrow’s industry
Talking talent in insurance, Peiris opines the industry needs to do a far greater job of making jobseekers appreciate the intellectual challenge associated with careers in insurance.

“The intellectual challenge is trying to price something that you really don’t know the cost of,” he explains.

“You’re taking very educated guesses at that cost. There are very few industries like ours, where you really don’t know the cost of your product on the day you sell it, because it’s subject to weather events or whatever that you’re trying to cover. And I’ve found that quite stimulating over time.

“If you think about … a message to people who are smart, young [and] motivated who might be attracted into the industry, rather than have them fall in, try to show them that [challenge]. I think that’s something that we’ve been trying to do more of through, particularly, our graduate induction program, going out to campuses and showing people that, but also generally through our employee value proposition, to try and help people understand that there are exciting, rewarding careers with interesting jobs, now particularly around data, that will attract young people.”

On the subject of data, Peiris talks about the evolving role he foresees for data and analytics in insurance in times ahead.

“Insurers have been using data for a long time to rate properly. The thing that I think has to change is more customer overlay on top of that data, because the data that we use at the moment really is portfolio by portfolio, and we look deeply down into those portfolios and we’re trying to balance the pool that we have,” he says.

“I think we can get better customer data that enables a better rating and risk selection, and then, secondly, better customer data to make sure that we’re offering them the right thing at the right time – both of which I think the insurance industry is developing.” 

Investing in the future 
Peiris says Allianz has a significant focus on data and analytics, both at a local and at a global level. 

“We’ve invested quite heavily in data science, in machine learning and all those things that you need to do to be a big data company, going forward,” he says. 

Discussion turns to insurtech and the associated threats and opportunities.

“I think as with any new competition emerging from left field, you must always pay attention to them, because what emerges from left field is always something that can be a major threat to you in years to come,” he says. 

“In engaging, what we need to continue to be good at is risk selection and pricing, and the investments in that side of insurtech are very interesting to us. We’ve invested significantly at a global level and here in data scientists and in analytical tools so that we can better refine our rating models.

“I think, also, engaging with insurtech is important and our Allianz global colleagues certainly have investments with various insurtech companies.”

On other recent developments in Allianz Australia, Peiris discusses its enhanced commercial packages online platform.

“We’ve launched our SME platform, Allianz Alive, which went live towards the back end of last year and is now fully up and running … [it’s] a major refresh of our SME offering – which is very important to brokers and really important to us … and we continue to refine that as time goes on and innovate further,” he says.

“If we look at our tailored solutions business – again, a big strategic push of ours – we’ve restructured our entire team behind the scenes here so that we have a very focused underwriting capability and distribution capability for risk underwritten business, offer and acceptance business that isn’t SME and is smaller than big-end corporate stuff that we’re doing. And then, finally, when we look into rural and regional as well, we have a significant push into farm, and the farm pack offering will commence towards the back end of this year, which is a fully automated farm offering, which will be part of the overall strategic fit with us for rural and regional.”

A diverse workforce
Inside the organisation, Allianz Australia’s efforts to enhance the diversity of its workforce have been recognised externally for some time.

In December, its ongoing work to improve gender diversity in the business was acknowledged for the eighth consecutive year by the Workplace Gender Equality Agency, which awarded Allianz an employer of choice
for gender equality citation. Allianz was one of only two general insurers to receive this acknowledgment.

“Diversity is strategically important to us, because we’ve said for a long time it’s just good for business. It helps us think more broadly and to understand our customers better if we are a more diverse bunch inside this company,” Peiris says.

He says diversity has been a focus of the business during his time as head of Allianz Australia.

“Through that focus, we try to then encourage the drivers of diversity, whether it be through selection, training and development of our people, or things like flexible working conditions.”

Peiris emphasises the importance of accountability for efforts on the diversity front.

“I think it’s really important that you hold yourself accountable,” he says.

“We’ve set up targets internally. They’re aspirational, but we basically say we want to achieve a certain level of female representation in senior management ranks by 2020, and we’ve been working our way through to that and I’m quite pleased with the progress we’re making at the moment.”

People change, Peiris says, is the biggest change happening internally at Allianz Australia.

“When you look at our organisation and how we grew up, necessarily we were quite a traditional hierarchical system. As we grow – we’re now $4.6bn in turnover in terms of GWP – our aspiration is to be much bigger still. You need to change the way the company goes about doing its business and you need to devolve decision-making.

“For that, we’ve got a strategy around a workforce for 2020, which looks at how we recruit people and the types of people we’re recruiting, and that’s where diversity comes into it as well. Secondly, [we’re looking at] how we get them through the organisation, in terms of their development, and, thirdly, how we then get them into those senior management roles that are necessary in a diverse talent base that recognises the challenges of the future.

“We say we would like to have the best workforce that’s able to deal with all those challenges in the future, and have the right skills and capability to achieve it.”

Peiris continues: “That, I think, is a huge change … you can always do a project, but cultural change takes a lot of effort and it’s something I personally lead. I think it’s something that we need to have necessarily in order to have different ways of making decisions that aren’t reliant on hierarchy.”

The year ahead
Key priorities for Allianz Australia in 2017 – Peiris’ last year as MD – centre around the continued execution of its strategic plan.

“We had a strategy approved in 2015, and year one of implementation was 2016,” Peiris says.

“The plan really focuses on a few things: firstly, what I would call a focus on the end customer. We have previously always looked at our intermediary partners as the way we grew, so we acquired intermediaries and we grew that way, and as a result … we have significant market shares in motor car dealers and [financial institutions].” But we really haven’t focused on their end customer base. A lot of the work that’s going on in systems and in process is to look at how we get to the end customers together with our partners – or indeed the end customers directly when we have our direct business – and look at them in a way that we understand them better and, therefore, they’re more likely to buy more product from us and/or stay with us for longer.

“A lot of work is going into that. It’s a threeyear program, and implementation will take some time to carry through. As I said, we’re one year into that three-year program and so far, so good.”