Online Is Future of Insurance Market
By Yoon Ja-young
Guy Marcillat, president, CEO and group executive officer in Korea for Kyobo AXA General Insurance, is one of the most familiar foreign CEOs in Korea _ he has been in advertisements for the insurer. In an interview with The Korea Times, the versatile Frenchman, who dreamt to be a pilot and has a Ph.D. in medical biochemistry, gave his insight on the insurance market.
Marcillat said there are few companies that can show good results after only one year of activity. ``Kyobo, a very well known and respected company in Korea, and AXA, currently the biggest insurance company in the world, successfully mixed their philosophies. We didn't fire anybody, still having 1,500 employees, and there has been no restructuring plan.''
The French insurer acquired the online auto insurance business from Kyobo, and the two have been maintaining a friendly relationship. They set up a joint venture in asset management, hoping to get synergistic effects from Kyobo's specific knowledge of the market and AXA's unique knowledge in terms of product innovation.
``Last December, which was only six to seven months after we took over control, we reached break even in International Financial Reporting Standard (IFRS). It's absolutely unique. I mean I have been working for 24 years in Asia, but I've never seen such a performance. It's absolutely amazing.'' He expects to see profits this year. ``Last December, production was up by 30 percent. This year it should be around 20 percent higher.''
Deal With High Car Accident Rate
Marcillat pointed out that the Korean auto insurance market has an extremely high accident rate compared with France or Japan. ``I think Korea has an accident frequency rate of around 22 percent. In Japan it's 10 percent, and in France it's around 14 percent.''
He said everybody should support regulators such as the Financial Supervisory Service or the Financial Services Commission when they try to decrease the accident frequency: ``Because it is a matter of national interest. This is not only in the interest of insurance companies. Everything has to be done to decrease the accident frequency.''
Marcillat was invited to a lunch by the prime minister a couple of months ago, where they discussed safety policy in France _ the accident frequency rate in France has decreased by 50 percent over five years. ``I gave my knowledge of what had been done in France. For example, cameras, new rules, how to educate people, and how to prepare for the new driving license system.''
``I repeat, not only the insurance companies, but all the population has to support the initiatives of the Korean government to improve road safety. That's the first move.''
He also called for more deregulation. ``There are still many things to be done by the government to deregulate a bit more of the market. Industry is ready to help. We are living in an open world. I think that in an open world, deregulation should be done as much as possible. Obviously we need regulation. Obviously insurance companies need to behave, obviously. That's evident. But on the other hand, I think perhaps the authorities should give a little bit more freedom. Because freedom means innovation, innovation means new products, and new products means new service, and in the end the customer is the winner.''
Kyobo AXA Welcomes Samsung
Samsung Fire & Marine Insurance, the top non-life insurer in the country, announced that it would advance into the direct channel market. Marcillat welcomed the giant competitor.
``Tell me why Samsung is going to enter the market if it is not a future market. It's the evidence. The answer is there. People are saying `Ah, Samsung is entering. It's going to be terrible.' No. Not at all. It's good for everybody.
``First, it is recognition of future potential of the direct market, clearly, and second Samsung promotes the direct market and so direct market will grow. Regulation will perhaps become softer. We have everything to gain from Samsung's entry into the direct market. We know the strength of Kyobo AXA. I am sure that the market is sufficiently big for everybody. There is no private garden. That does not exist. The garden is for everybody. So, welcome Samsung.''
The CEO noted that online insurance market is big and expanding rapidly. ``The online market is extremely high, 16 to 17 percent basically and increasing very quickly. In Japan it's less than 5 percent. Korean people are very curious, very interested in direct insurance.''
He said the concept of the direct market is perfectly in line with the evolution of world population behavior. ``Direct, online means that people have more choice, that they can compare the price. I think it' s good to give people the chance to compare. I believe that an open market and competition is very healthy. Direct is increasing because it corresponds to the wishes of the population.''
Chance in Long-term Insurance Market
The insurer changed its name to Kyobo AXA General Insurance from Kyobo AXA Auto Insurance, launching long-term insurance products. Marcillat said Kyobo AXA noted the Korean population's need for health and medical services.
``I think there are different ways to increase our shares in the Korean market. The first is doing big promotion on auto, and the second way is to improve our offers, trying to provide solutions to the Korean population as we have done in France, in Germany and in Japan. As we are doing well and as now we are profitable in the auto, time has come to switch to another offer. This will be health, medical, because it corresponds to the expectations of the population.''
He said the magic of the direct market also works here. ``Medical is fundamental, you need coverage. And what we have launched is absolutely unique.'' He said the product gives wider coverage, say, 60,000 won from the first day the subscriber enters hospital, while competitors provide 30,000 won from the third day. ``It's simply because as we are direct, we have lower costs. Then we give back part of the profits to customers. This is the real philosophy of direct. The service is the same. It's the same hospital, the same bed, the same doctor. The only difference is the coverage and reimbursement. That will be definitely a success. A lot quicker success than auto.''
Stick to Principle of Insurance
AXA Group has risen to become the world's top insurance group, intact despite the global financial market turmoil. Marcillat said AXA survived by sticking to insurance.
``The safety and interest of customers, this has made AXA what it is today. If you look at the recent situation in the world of finance, you have seen a huge collapse. And what about AXA? It didn't plunge. AXA Global became the biggest insurance company in the world.''
He said AXA has become reference stock in the insurance field. ``People knew AXA had been doing insurance, and insurance only. AIG is very strong in insurance but they lost a huge amount of money because of things other than insurance. AXA has always been a very stable, very traditional company. And today, the traditional company is winning.''
He said Korean insurance companies have not been involved in the global financial crisis as they are very local. Being local seems good in this case, but they should go global for diversification in the future, the CEO said. ``Korean firms have the risk of one country, risk of one currency, where as AXA is very well balanced with several major markets, several major currencies. That's why Korean insurance companies should look for international partnerships.''
"As a global player, AXA Group is interested in international partnership. Then if this corresponds to the strategy of a life or non-life Korean insurance company, AXA Group would, then, be open for discussion in the sole interest of Korean company."
CEO Promises in Commercial
Marcillat is familiar to Koreans, being in TV commercials and advertisements for the company. He said the fact he was in a TV commercial is not important.
``What is important is the message, `redefining standards.' What we want to say is that we want to switch from the lands of promises to the lands of proof.'' He said he guarantees it. ``I prove it. That's the reason why I'm in the commercial. I guarantee, me as the CEO of the company, guarantees it.''
He said he is receiving letters from customers. ``It's marvelous. There is direct communication between the CEO and the market. It is absolutely unique. You can't imagine the amount of letters we receive. People are communicating with the CEO. I received a letter last month from a child asking `why you don't have insurance for my dog?' This is beautiful.''
He said communication between market and CEO is the piece of gold. ``A company like Kyobo AXA can only succeed with this kind of behavior. Someday this boy will have a car, he will remember the answer from the Kyobo AXA CEO. That was the logic of this commercial. Show the CEO and show him not as a man but as proof that the company is delivering a normal, correct, acceptable service, and the company is taking care of customers. It works very well.''
CEO Is Like a Pilot
Marcillat has a very unique career track. He wanted to become a pilot when he was very young, but switched to medical biochemistry. The doctor recently has been doing marvelously as a CEO. ``You can do everything you want in your life. Everything is open.''
He said there is one thing in common among the jobs he had _ logic. ``Biochemistry means chemistry of life, the body, how to cure, how to prepare medicine. It is based on pure logic. Insurance also. It's also mathematics, logic. And direct, online, is 100 percent logic. Piloting, biochemistry, insurance, and online are from the same part of the brain _ the logic part,'' the CEO explained.
``You increase advertisements and you will have an increase there. People use the Internet more, and you will have online increase.''
He emphasized communication and listening to people. His philosophy of management is ``never decide alone.'' ``You always need to discuss, listen. Everybody can make a mistake. You have to listen to all executives and decide. You need to listen as much as you can.''
He said people should be encouraged to speak. ``I have a sentence of Charles de Gaulle, which says `Betrayal starts where frankness stops.' If the CEO is wrong, the vice president should say so,'' said Marcillat, who keeps his messenger always open to Kyobo AXA employees.
Guy Marcillat boasts of very unique career track. Born in Sfax, Tunisia, former French territory, in 1949, Marcillat once studied to become a pilot, but switched to science and medicine, holding a Ph.D. in biochemistry.
After entering the world of marketing, Marcillat has mostly been an Asian market expert, having served as CEO of pharmaceutical and perfume companies and AXA Non-Life Japan.
The energetic French CEO is also very good at painting, giving the impression of a Renaissance man.
Marcillat, who sees an increasing number of people recognize him on street after being in the company's advertisement, has perfectly adapted to the country. He even enjoys "samhap," the ammoniac, fermented fish served with boiled and sliced pork and old kimchi, which even some Koreans find hard to handle.