Five Group initiatives – this is how UNIQA is increasing efficiency and profitability in the core business
Five strategic initiatives in the core underwriting business build on the foundation of this strong capital base.
A programme was developed aimed at safeguarding and/or increasing sustainable operating profitability in each of the three business lines of property and casualty insurance, health insurance and life insurance, and this programme is now being implemented under the supervision of the relevant expert Board Member. Two further strategic initiatives are running alongside this with a Group-wide effect on the core business.
1. Property and casualty insurance: combined ratio under 95 per cent
A significant increase in earnings performance is one clear objective in the property and casualty insurance segment, which is the segment from which UNIQA expects the largest amount of premium growth, especially in CEE. The combined ratio is the index used to measure this, i.e. the ratio of expenditures for insurance operations and benefits to premiums written. Supported by investments in operational excellence, a number of projects have been initiated that are aimed at reducing the combined ratio to below 95 per cent on a sustainable basis by 2020. Among other things, the focus will be on optimising premium calculation, portfolio management and claims management as well as on enhancing the efforts to fight fraud.
Property and casualty insurance
As planned, UNIQA further improved the combined ratio, especially in CEE, in 2017, and with 97.5 per cent came one step closer to reaching the target value. Key measures to achieve this include managing portfolio more intensely and the targeted efforts to avoid unprofitable business.
In countries characterised by significant regulatory intervention, e.g. Poland, UNIQA has succeeded in enforcing price increases and therefore improving the profitability of its core insurance business. Fraud prevention was also further enhanced in 2017. In Austria, a system specialising in processing large amounts of data went into operation at the beginning of 2018, and it will shortly be rolled out in other countries.
2. Health insurance: defending market leadership
UNIQA is the clear market leader in Austrian health insurance. This division is a crucial centre of excellence and therefore a main pillar that supports the Company’s earnings. This is why defending our leadership position in this profitable area is one of our most important objectives.
Rapid technological advances are currently the biggest driving force in healthcare. In the world of individualised medicine and adaptive insurance, the classic roles of the healthcare industry are being reshaped. UNIQA wants to actively play a leading role in this transformation. Further expansion in services to customers is a key priority here. Selective investments are planned for this throughout the value chain in the areas of health advice and provision, health services and digital health solutions.
As a trend-setting innovation, for example, the urgent care insurance project “Akut-Versorgt” (conducted in collaboration with the Döbling Private Hospital, which also belongs to the UNIQA Group) was implemented last year. Initially only available in the Vienna area, Akut-Versorgt grants rapid access to medical care on weekends or at night to UNIQA customers if they need urgent care, for example if they have cuts, circulatory problems or sports injuries. This service, which is offerred as part of a low-cost insurance component, will also be extended to the capitals of other states in Austria in 2018.
The new UNIQA Mobile HealthCheck was also started in 2017 as a visible sign of our continued commitment to corporate health management. This 70-square-metre mobile medical facility service is in high demand, offering the UNIQA FitnessProfil, backend diagnostics and diverse medical tests. Likewise, in the past year, the online health platform medUNIQA was set up, and it is expected to be operational in 2018. On medUNIQA, UNIQA customers can find out about new and existing VitalServices and get informed about the topic of health. Upon request, they can be guided by an innovative chatbot through the world of UNIQA offerings.
3. Life insurance: optimising the product portfolio
The low interest rates that have persisted for many years have a particularly strong effect on life insurance. Earning capital costs over the long term is difficult under the current conditions in the capital markets, depending on the relevant investment strategy. The capital-generating life insurance that traditionally dominates the market in Austria is particularly affected by this. The strategic initiative in this line of insurance is therefore targeted predominantly at ensuring a new direction for the product portfolio and increasing the profitability of existing contracts. One crucial element here involves designing life insurance products that generate the required margins both for customers as well as for UNIQA despite the low interest rates and that have capital requirements in line with profitability.
In 2017, UNIQA once again took the lead in the life insurance sector in the Austrian insurance industry. After we were already the first to launch a classic life insurance policy without a guaranteed interest rate in 2014, we have been offering another innovative feature in the form of a completely reworked offer in the unit-linked life insurance sector since 2017. We have thus taken an important step in the long-term optimisation of our product portfolio. Transparent, affordable and flexible for customers, the new product also meets all regulatory requirements. The uniform presentation of the costs of insurance products offers the customer better comparability with other providers, and therefore provides a competitive advantage.
4. UNIQA Insurance Platform (UIP)
The objective of this programme is nothing short of the renewal of the core system in all sectors and the associated organisational transformation of the Group. In the medium-term, UIP will replace the existing IT core systems that no longer map innovative processes, products and functionalities effectively. This project is designed to last for more than ten years and will put UNIQA’s business on a completely new foundation: UIP will dramatically reduce product development time (time to market), create flexibility in the product design and, in the medium-term, significantly reduce the operating costs of all data processing. Additionally, we will create the necessary conditions to better satisfy the expectations and wishes of our customers in future, which are changing ever faster and radically in an increasingly digital world.
UNIQA Insurance Platform (UIP)
To implement the UIP programme, UNIQA built its own organisational unit last year, which in turn is structured into 19 projects. In addition to the internal committees required for steering and decision-making, (i.e. Business & IT Architecture Board, Change Request Management Board, Change Request Funding Board, Operative Steering Committee), a separate IT committee of the Supervisory Board was established.
The first important milestone in the concrete implementation of UIP will be the start of sales in mid-2018 of a new unit-linked life insurance product through the Austrian bank distribution (phase 1). In 2017, a large part of the required functionalities had already been developed, as well as the necessary adjustments in the existing UNIQA systems. The preparatory work for phase 2, the sale of the same products through UNIQA Austria, occurred in 2017 so that implementation could begin in early 2018. Both schedule and budget were consistently adhered to.
5. TOM – Target Operating Model UNIQA Austria
Since the beginning of the UNIQA 2.0 strategy programme in 2011, the Group has been working on making all of its customer processes more efficient, faster and less expensive. This modernisation and optimisation project, referred to as the “Target Operating Model”, involves internal processes that aren’t visible from the outside. On the one hand, it focuses on bringing together settlement units in locations where high-quality services can be provided at low cost, and on the other hand standardising the many individual products and processes. The savings potential that will be unleashed as a result of implementing the new Target Operating Model will increase gradually, and we will reach a double-digit million euro amount before 2020. In part, these savings will also be based on capacity changes that will take place as much as possible over the course of natural fluctuations and in agreement with our employees.
TOM – Target Operating Model UNIQA Austria
An essential focus in implementing the Target Operating Model in 2017 was the gradual shift from processing business transactions in the central service units and the regional offices to the Group Service Centre in Nitra, Slovakia. In addition to redefining the governance for cross-border cooperation between Austria and Slovakia, comprehensive quality assurance measures were also implemented.
In the field of automation, 2017 saw the launch of several diverse initiatives using new technologies such as artificial intelligence, robotics or automatic character recognition (OCR). In health insurance, the first OCR modules are already replacing manual operations when processing standard business transactions.
Thanks to successful marketing campaigns, around one third of all 425,000 myUNIQA customers now receive UNIQA communications via the electronic mailbox. This is more convenient for customers who always have quick access to their documents thanks to the electronic filing system, while at the same time reducing paper consumption. In turn, UNIQA’s energy usage declined as a result of the introduction of modern energy management in Austria. The installation of smart meters and the implementation of the first energy-saving measures will pay for themselves in two years.