Fresh from a financial crisis, policymakers in Portugal have revisited the basics as they look to balance the books and reduce the level of debt-based consumption. Meanwhile, on the investment side, there has been a notable shift away from risky products and into more conservative ones, with a clear preference for lower, more guaranteed returns.

In this changed climate, insurance has been forced to on-board some of the challenges, though this isn’t to say there aren’t also opportunities. The industry’s performance is on the up, and success in this arena asks only that firms take note of the ways in which consumers are changing. World Finance spoke to Teresa Godinho, CEO of Allianz Portugal, about the ways in which the sector has evolved and how the company has responded.

After years of austerity, Portugal used EU funds to recover economically. How has Allianz fared during this time?
Entering Portugal’s recent economic crisis in a strong position in terms of the efficiency of its processes, as well as the quality and innovation of its products, Allianz has maintained good relations with its distribution channels. While it was a tough period to go through, the company was able to consistently outperform the market, both on growth and profitability.

Throughout these years, the company kept a pragmatic approach, each year assuming what had been achieved represented the past, and the future would always need additional developments, innovations and actions if it is to succeed. Consequently, Allianz has never stopped improving and redesigning its processes, launching new solutions, rejuvenating its workforce and enlarging its ties with different distribution channels. As a result, the company ended 2014 as the nation’s third largest non-life company, with an 8.2 percent market share.

How has Allianz assisted with the country’s financial recovery since the economic crisis?
The insurance sector is closely linked to the growth of the country, and in recent years the market has not grown, which made the situation more difficult for most of the players. Allianz has been on a counter course to that of the industry’s general performance, and, as in previous years, has presented very favourable results, growing in all major business lines – except motor.

These results arise from the trust of the company’s intermediaries as customers have shown, as well as the work it’s been developing over the years. In particular, 2014 saw a commitment more intense, and consistent investments in the digitalisation of its operations, as it pursues a model where digital and physical world coexist, and one that allows the company’s customers to choose how they relate with intermediaries and Allianz.

What are Allianz’s highlights from 2015?
Allianz reinforced its position in the market by expanding on its presence and by keeping its profitability above the rest. This has been made possible by its investment in the beginning of the year in restructuring and the enlarging its internal distribution workforce, so it is able to deliver better and closer support to all the company’s intermediaries.

At the same time, it undertook equivalent restructurings of its product and claims areas, so it could focus on different customer segments in a more consistent and specialised manner. As well as that, the company will launch a new generation of products for retail and SMEs. It will continue to pursue its digital project, with regular launches of new tools to intermediaries and customers, a stronger and wider presence on the digital stage, not only directly, but also once again through its main agents.

How does the company plan to build on these achievements?
To ensure it keeps to the same path, Allianz must continue to reinvent, by combining some of its current options with new innovations, not only in terms of technologies, but also in its approach to business. With that perspective, it will continue to enlarge its physical capabilities; replace some of its products with more modern solutions, befitting of its customers’ needs both in terms of coverage and services. The company will also launch new digital, more customer-friendly platforms; and it will move from being a claims payment entity to a full service provider, mainly in the retail and SMEs segments.

What challenges did Allianz face in 2015?
The beginning of the year was characterised by a rise in the optimism of Portuguese consumers, which, together with low oil prices, provoked a significant increase in car usage to pre-crisis levels, showing that the economy is recovering and consolidating (see side bar). On the insurance side, we observed a rather relevant increase in claims frequency, as well as on the severity of them.

The price of motor insurance decreased throughout the crisis period, given the low frequency and severity of claims, and this rapid pickup has to be price adjusted, but at a slower pace. Therefore, motor profitability has been a challenge, and will continue to be throughout the coming year.

Allianz has been adjusting its prices gradually, and it will continue to do so in 2016. At the same time, we are working on our processes in order to improve productivity levels and reduce our internal costs, and to be more competitive.

How are you improving your digital offer?
On this issue, we believe we are one of the leading players in the Portuguese market. Allianz has made a big bet on digital platforms that allow us to simplify the language, and, at the same time, get closer to the customer. Our main target is to facilitate communication between the client, the agent and us. In this sense, we intend to explore the relationship between physical and digital proximity; the physical agent can also be a digital one.
Good examples of this are our presence on social networks, with a particular emphasis on Facebook and our recently launched blog.

The ‘E-customer’, meanwhile, is another tool that follows the structure of a home banking portal in order to make communication with customers closer, more fluid and more direct, always through its agent. This platform allows the customer to undertake several actions and simulations in their insurance portfolio, or to acquire new products and services. On the product side, we are working to make all our retail products available for purchase via one of our online agents, and most of our services will be available online before the end of 2017.

What does sustainable growth look like at Allianz?
Allianz aims to give consumers the tools they need to live their lives without fear and to focus on the development and promotion of talent and skills for each person.

As a socially responsible company, we want to create an emotional connection with our audience, based on the question of identity. Our communication efforts focus on bringing the brand closer to the person, on speaking the same language, using the same channels, and giving them new experiences and good moments.

How does Allianz intend to put its clients at the heart of business?
Insurance companies are the ones that must adapt to demands, and not vice versa. Therefore, the company believes that its intermediaries should be multichannel and have more than just a physical presence – which is nonetheless highly valued by a very significant number of its customers. Allianz has to be where the customers are, and provide services that meet customers’ needs, both in terms of schedules and platforms. I have no doubt that this is where the future lies, and, based on this vision, the company is working to become a unifying player in this whole process.

What are some of the biggest trends you’ve noticed within the industry?
Besides the ones we most commonly hear about, like changing demographics, new technologies and climate change, I would add the services and the ways in which they’re available. Although it might sound like a buzzword, missing this multichannel experience is to miss the trend of the industry.

Today, the customer does not want to go through weeks of bureaucracy to finally get permission to repair something, or agree what amount will be indemnified. He or she just wants to have some party repair within 24 hours whatever needs to be repaired, independently of them having insurance or not. This change in mindset means that Allianz must adopt an entirely different perspective, and it takes several years in order to achieve what I would call minimum standards in this area.

How have you altered the company’s strategy to accommodate these changes?
The company is working towards offering its services in a different ways, and it expects to have the major changes fully implemented within the next two to three years. At the same time, Allianz is also looking into the other trends and it plans to start launching new solutions based on new technologies by the end of next year, as well as the risks that arise from the technology-first world we are living in.

It is diversifying its offering on the savings side, so it can have different solutions for different needs and profiles. And at Allianz we’re permanently revising our reinsurance terms, so they reflect the proper coverage needed, given the effects of climate changes, the company is observing.