The New PZU - More Than Insurance
On 9 January 2018 the top Polish insurer PZU presented its Updated Strategy and Implementation Plan for 2017-2020. The values of New PZU are focusing on consumer needs and digitalization. The new mission is to help clients protect their lives, health, assets, savings and finances across a full client life cycle.
“By re-defining the PZU Group’s mission, we have drawn conclusions from our own experience on the one hand, while pointing to the direction in which the entire industry will move on the other hand”, Pawel Surowka PZU CEO wrote in the strategy. “We want to do something different from the classical client relation model that most insurers follow, in which the only contact clients have with their insurer (afer buying a policy) is when a claim occurs. We want to do considerably more and effectively help clients solve their problems in many areas at every stage of their lives. PZU’s new approach to building client relations are at the heart of this change”, he added.
PZU is plotting heady growth in non-insurance business areas. Health care should still be on track to PLN 1 bln in revenues in 2020 and a 12% profit margin. The insurer wants to raise PLN 1 bln in insurance premiums via the banking channel and to help its bank units increase client count by 1 mln by 2020. PZU further expects an unspecified PLN 100 mln in cost cutting via cooperation with banks. PZU can build group ROE to above 22% in 2020 from 14.9% in 2016 as it pushes its way into a broader swath of client finances, takes the benefit of new links to banks and finesses higher margins from its core insurance business.
“We also want to alter the philosophy of how our sales networks operate. We will move from a “product-centric” model to an ecosystem in which our overriding objective will be to manage relations with clients by offering them our solutions in all the avenues that are accessible to them. Accurately anticipating the future, understanding client needs and building ever better methods of becoming part of their daily lives are the logical foundations supporting the key initiatives in PZU’s new strategy. Among others, these initiatives include radically simplifying our product offering and preparing our sales network to offer all our products and services, investing in database integration to deliver a full picture of our clients, cross selling, offering a loyalty program and reducing the age of our client base. Tightening cooperation with Alior and Pekao SA banks is also an important issue whereby we will be able to devise comprehensive financial solutions responding to the needs of retail clients and small and medium-sized companies”, said Pawel Surowka.
The core insurance business can be tightened on smart pricing and more global marketing throughout the group, be it online, via banks, direct or via multi-product sales force. The P&C business can put its combined ratio down to 92%, largely thanks to improvements from smart pricing. Expect a rise in life segment margins above the 20% mark. Bottom line: insurance will deliver 3.0 of the just over 7 pps of ROE improvement through 2020. Banks Pekao and Alior lead with a 3.4 pps contribution.
Please find the investor presentation attached to this dispatch on the beinsured.pl portal.