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Q&A: Scott Gunter of Axa XL

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Scott Gunter

Scott Gunter joined Axa XL, a unit of Axa SA, from Chubb Ltd. in February 2020, shortly before the COVID-19 pandemic took hold. Since taking on the role of CEO, he has led several management and structural shifts at the commercial insurer. He recently spoke with Business Insurance Editor Gavin Souter about those changes and the outlook for the market. Edited excerpts follow.

Q: How have the management and structural changes at Axa XL affected your business in North America?

A: We had a meeting after I joined where we had some clients come in, and one of the things they asked us to do is to organize ourselves a little more around clients. We took that to heart and said we’ll maintain our product discipline, but we are going to organize ourselves into three zones and the responsibility within those zones is to be that client-centric face and operate in the white spaces between the products.

Q: What difference does that make from a practical point of view?

A: We take on the responsibility, working with the broker, to figure out who should be meeting with a client. In meetings this week for example we’ll be sitting with clients and saying, “What are you worried about? What are your concerns?” and then we’ll say, “OK, wait a minute, let’s try and organize ourselves to deal with your particular issue.” It puts the burden on us to make sure we have the right people at the table.

We had feedback that to get through Axa XL you need six different meetings, and we are trying to get that down to one. It may be a longer one, but it should be one where we cover the key issues.

Q: Where do you see opportunities for growth over the next few years?

A: We did a lot of work in 2021 where we had some re-underwriting work to do in the portfolio, whether that was through reduced lines or we bought more reinsurance. We just had to right-size some of the business. We were putting out too much capacity for the premium we were collecting.

That’s done, so now when we go into 2022, 2023 growth is going to come from a number of factors. There is more adequately priced business in 2022 than there was in 2019, so that presents us with opportunities. We are interested in growing our property lines, our primary casualty business and our professional lines. And then our marine and energy business continues to perform well.

Q: What are some of the challenges for underwriters at the moment?

A: Inflation is a very big challenge. You have underwriters who have never lived in an inflationary environment, and you have clients that have not bought in an inflationary environment. We haven’t seen this since the 1990s, and there are challenges internally and externally with that. Insurance to value is a cornerstone of our business, so you have to look at what you are insuring and ask what is the replacement cost. That involves a lot of work between claims, our risk engineers and underwriting to try and stay current. For example, when you look at the price of steel, or whatever the material may be, you can say, “Well, the price has only gone up a certain amount,” but the issue is that the client doesn’t want to wait for the steel, so as part of the claims process you have to say, “What do I need to pay to get to the head of the line to get our client back up and going?” If you are building a greenfield you get to plan it all out and say the steel needs to get there in nine months, but in an insurance claim the steel needs to get there in a matter of weeks and you can’t preorder it.

Then our underwriters are spending a lot of time with clients on their property values. That’s critically important to the client and to us because you don’t want to come up short on the values.

So inflation is the newest one on the docket, and then there are the ones that we’ve been dealing with for the past few years — elevated catastrophes, social inflation — and none of that has been reduced. It all adds up to a challenge for clients because you get pressure on all fronts.