As part of our AXA XL sponsored podcast series, we talk with Lucy Pilko, CEO, Insurance in the Americas for AXA XL.

Just a couple months into the role, Pilko talks about beginning the process of executing AXAL XL’s long and short term strategic visions. She discusses market opportunities and areas of challenge, and learning how to really use the data and technology we now have access to.

Read the Transcript here

Sandy
Welcome to the Leader’s Edge podcast. I’m Sandy Laycox, Editor in Chief of Leader’s Edge. In this episode of our sponsored podcast series with AXA XLl, I talk with Lucy Pilko, the company’s new CEO for Insurance in the Americas. We’ll hear what drew her to AXA XL and what she’s bringing with her from outside the industry. We’ll discuss short and long term planning at AXA XL, as well as market dynamics and new investment opportunities, as well as what is required for success. I hope you enjoy it. 

Sandy
I am here today with Lucy Pilko, CEO of Insurance for the Americas at AXA XL. Lucy, welcome. 

Lucy
Thank you. Thank you so much for having me, Sandy. 

Sandy
It is great to have you. I’m very excited you have just recently started your tenure at AXA XL. So really excited to hear about everything that you have going on and are thinking of doing and we’ll kind of walk through all that. But we’d love to just start with in general, what you hope to accomplish in this role, what you’re bringing from your past experience that you’ll put to use as you drive AXA XL forward. 

Lucy
Yeah, well, it is a really exciting new beginning for me. I spent 20 years at the Boston Consulting Group in the insurance space and leading the insurance team at BCG. But this is a very different and exciting opportunity. As I thought about joining Axel and where I can help take the organization forward, particularly in the Americas, it was a very easy place to get to a yes, in terms of joining, it’s a tremendous team. The organization has incredible depth of underwriting claims, risk consulting talent and has done a lot of work over the last few years to really bring the business to a very strong place in terms of our satisfaction with the book of business that we have and the profitability of that. But all that being said, the most exciting part is the opportunity for growth. 

Lucy
And as I looked at it and thought about it from an AXA wide perspective, the risk pools in commercial insurance in the Americas and predominantly in the US are one of the most underrepresented risk pools for AXA Group as a whole. And so that just creates a tremendous opportunity over many years to grow the business and to diversify the portfolio that AXA has. And so just super excited to explore the potential. And for me, I think there are things that I can bring from my prior life that will hopefully be really helpful in both defining that strategy and executing on it. 

Lucy
So we have to take a strong look at the portfolio of risks that AXA XL underwrites today and the risks that we could underwrite in the future and bring a really strategic lens to what should that portfolio look like today, three years from now, five years from now, ten years from now? And so that’s a space that I have experience with other carriers, I think. Secondly, my past in professional services required me to focus incredibly on client engagement, building relationships and learning how to develop those relationships over time. And I think that is one of the keys to success for any company. But for an insurance carrier in particular to be really client centric. 

Lucy
And then maybe a third piece is the world around us is changing around data and analytics and the technologies that are available to help companies of all types evolve in new and different ways. I’ve had the privilege of working with clients insurance and outside of insurance of how they are taking advantage of the breadth and depth of data that can be at our fingertips and the tools that will really help us gain sights and take action around that. I’m hoping to bring that experience and that passion to AXA xl. 

Sandy
You know, I think that it will be really exciting to see how you can bring perspective from other industries and into your work at AXA xl. And it will be exciting to see where the company goes in terms of these underrepresented risk areas that I’m sure we’ll get into a little bit as we talk more. So, you’ve come at a time when AXA XL is at the beginning of its three year planning cycle, which is exciting and a great opportunity for you to employ some of these things. So, can you talk us, give us a little bit of insight into what that cycle will look like in terms of priorities and goals? 

Lucy
Yeah, absolutely. I think maybe I’ll start a bit thematically and then obviously there’s sort of very specific business opportunities that we’re looking at. But if I think about what we have to accomplish over the next three years, there really four big things and all of that is underpinned by a real client centricity. But the four things I would say is really looking at upping our game around the solutions that we can bring to the market. I think Axe XXL has historically been known as a place of innovation around products and solutions. And so really using that expertise and capability to develop new offerings that better meet our clients, evolving strategic goals and risk management challenges. So really upping our game around the solutions that really matter to our clients is one. 

Lucy
The second one that I think about is valued beyond the policy on this risk transfer is an incredible tool in managing the total cost of risk for clients, but it is far from the only tool and we would be doing our clients a disservice if we didn’t bring the expertise we have in terms of really identifying, understanding, mitigating, ideally preventing risk from occurring to their risk management teams. And so we are investing in a number of different ways to better able to bring that expertise and to serve it up to clients. We’ve built an ecosystem of technology partners starting in our construction team in the Americas that now goes beyond that are really providers that help our clients manage their own risk. 

Lucy
Then we are building and committed to really expand over the next three years our digital commercial platform, which is designed to make easily accessible some of the diagnostics, the data, the tools that will help clients assess and act on risk. The third one that I think about in terms of our three year plan is around data. This goes back to where I was earlier, but really making sure that we are using the data we have to deepen our relationship with clients and investing in our own capabilities to access and leverage that data. Then the last one, which I think is just a constant for businesses, is being focused, fit and fast and that’s making sure that we are spending our money in the best possible ways. 

Lucy
If you think about what you would do as an entrepreneur running a small startup, the same principles should apply that we look to spend our money for the highest return on investment, and that means taking out unnecessary steps and processes that can help us move faster and with more efficiency. So those are thematically what we’re going against and we’ll apply that in a lot of different, specific parts of the business. 

Sandy
Yeah, it sounds like there’s definitely so much under those umbrellas that you could implement. One question though, as you work on creating new risk transfer solutions for these complicated risks that maybe have to be looked at a different way, and then you also, as you said, have to incorporate a lot of risk mitigation, and that’s likely new for clients or some clients at least. What do you think is going to be the hardest part for brokers, your partners, in helping, you know, work with clients to implement some of these different strategies that maybe will be needed going forward? 

Lucy
Yeah, well, I think this is a place where carriers, brokers and clients can all be really well aligned. Right. You know, the world of risk is evolving. It’s evolving quickly. I don’t think we’re in a, we’re ever going to see a world where risk is less than it was the year before. There, there are new and emerging risks all the time. And so I think this is where a real transparency and partnerial spirit goes such a long way. Because you, the clients, the brokers, the carriers all have different viewpoints and angles on some of the same topics. And we should all benefit from a better risk management capability in companies. 

Lucy
I mean, at the end of the day, the reason that insurance exists and why it’s a field that I like so much is that I believe it underpins the economy, it enables customers to take risks. And I think that is something that allows companies to grow and to thrive. And I think our goals in that and brokers goals in that and clients’ goals in that are actually the same. And so I guess I would just ask for creativity, collaboration, openness. As we start to figure out how collectively we can bring our expertise and our data to, I don’t want to say, solve these problems. It’s really going to be more about mitigating risk because risks don’t generally flat out go away. We just get better at identifying them earlier and managing them. And that’s where we need everyone’s help. 

Sandy
Yeah, absolutely. Okay, so let’s talk a little bit shorter term. It’s the beginning of a new year. There’s good challenges and opportunities I’m sure that you all are looking at. 

Lucy
I feel really optimistic about 2024 and, you know, the potential for us at AXA XL to support and grow with our clients. So let’s talk about some specifics. There’s a lot of Runway, I think, in our core or traditional lines of business. So, you know, if I just, if I take property to start with, you know, capacity is still something that is much needed in the marketplace. And, you know, we’re committed to provide that in a consistent manner, which we’ve done over the last few years. And, you know, we really want to help our clients again with this sort of risk mitigation. 

Lucy
Hat on, make sure that they are managing their property portfolio in a way that is prudent and we can help with our risk engineers and sort of the partnership on what would it take to manage and mitigate the risks in the property book. But we’re looking to grow there and to continue to help clients. Second place where I see a lot of Runway is our construction team. What we’ve done with construction over many years is actually built a dedicated industry team, vertically oriented. There are so many interrelated products that we find that better serves the needs of our clients. We are expecting as the infrastructure bill plays through in terms of investments that are made in the Us and to see a lot more spend in construction. 

Lucy
And we’re ready, willing and able to go shoulder to shoulder with clients on making sure that they can pursue the projects. You know, DNO has been a centerpiece of the AXA XL portfolio for many years. We have a really strong team, predominantly based in Hartford and it’s been a choppy time for this market. But as always, we will continue to be in there and serving clients and maintaining our leadership position in that market. You know, and maybe a little bit of knock on wood, that we start to see a return of M and A activity as we go throughout 2024. So those are some of the. I would describe the sort of core businesses where I do expect to see growth. 

Lucy
And it’s not to say that we don’t see growth in other lines, but a few examples then to your point, about newer things where we focus with the mind’s eye, not just to 2024, but as we look out 3 years, 5 years, 10 years, cyber comes to mind. It is one of the places where we have been a leader and we intend to continue growing with the market and maintaining that position. It is a complex space and getting the education and the pricing right around that is something that we will continue to work with clients on. We feel good that the rise in ransomware, we’re starting to see some positive signs coming out of that and I think the industry has. We’re in a better place on that than we have been. Second topic that comes to mind is Middle Market. 

Lucy
We spent a lot of time talking with our brokers about our launch of Middle Market, which was in the middle of 2023. This is a long term growth space for AXA XL and we think that our expertise and particularly larger and more complex middle market risks bring something to the industry that is additive in terms of capacity. You know, the middle market space itself, and it’s very hard to size it, but you know, it’s easily north of 100 billion and probably approaching 150 billion in premiums. And you know, we are going to continue adding industry verticals as we build out our team and our capabilities in the middle market space. And then a last piece, which is a, it’s a long term shift, is really around supporting clients around Energy Transition. 

Lucy
Obviously this is front and center for traditional energy clients as they continue with their portfolio of more classic energy products, but are really starting to diversify their portfolios and needing to make significant investments to be able to deliver new and greener technologies to the markets. But Energy Transition impacts Companies of all sectors. And so we are really leaning in to make sure that the expertise in our teams is truly available to our broker partners, to our clients and to build that book of business. So that’s some immediate term things and then three, maybe more that we’re working on now. But we expect to grow and blossom over the medium term. 

Sandy
There’s some really meaty markets. The DNO is something that we’ve been paying attention to and looking at the changing factors there. So definitely an interesting one to be focusing on. And I think the middle market is also really interesting. And are there challenges with making it a good investment because of the size or have you all figured out how to make that work in kind of an efficient way? 

Lucy
I guess, yeah, well, I mean, only six months into this initiative, we are not at the scale where I say, oh yes, we’ve gotten to sort of the efficiency frontier. It’s sort of really early days. There’s. But because we have the support of Excel overall and group overall, we’re really making the investments in the talent and in the technology that will make this a scalable business for us. And so that’s where you have to get in terms of the efficiency. I should do a shout out at this moment in time to our first round broker partners. We limited distribution in the first months because we wanted to be able to deliver high quality experience for our distribution partners and our clients as we started to launch and scale the business. 

Lucy
And we’ve had just tremendous partnership from those brokers and a tremendous amount of interest from others as we talk about where we might go next with this book of business. We launched in private equity and added general industries and we’re launching a construction middle market vertical building on that expertise that I was referencing in the more complex construction space at the start of 2024. So yeah, this is something that we are committed to for the long run. And so we’re building with that in mind. 

Sandy
It’s very exciting to continue to watch that. 

Lucy
Yeah, it’s been exceeded our plan so far in our 2023 targets and we’re really optimistic about where this will go in the next year. 

Sandy
Great, that’s very exciting. Very exciting. Okay, so areas of concern, where are you looking at? With hesitation or maybe the need for more focus or. 

Lucy
Yeah, well, look, the cool thing and the challenge about being in this space is that risks don’t stay stagnant. And so I think intellectually that’s one of the fun things. It’s always nerve wracking when you don’t have years and years of actuarial data and you have great confidence on exactly what the loss performance will look like. But the team that we have is really incredibly capable of taking a look at those new and emerging risks. We’re looking at pfas and autonomous vehicles, and obviously some of the ones that I think are very much on the headlines of newspapers and the like around climate change and the implications there over the last year. The thing that is sort of equally exciting and terrifying is really probably around AI. 

Lucy
I think this is a challenge for the insurance industry, but it’s a challenge for all industries of really figuring out how do we use technologies where we don’t always understand what the machines are doing and how do we build in responsible AI practices within what we are doing as insurers and what our clients are doing to avoid adverse impact and really take a look at what the outcomes are. We may not always understand all of the connectivity of how the box works, but let’s make sure we’re really careful about understanding the outputs and the impacts of those outputs. So those are risk changes that are on my mind in a way that you could say are our challenges or our concerns, but are also opportunities in terms of really working on them and getting it right. I think the. 

Lucy
The area of concern probably continues to be social inflation slash lawsuit abuse. You know, and as we look at, there’s been a lot of talk about casualty and how casualty is perceived in this recent 1:1 reinsurance renewal cycle. I think this is something that we all have to be really on top of and working closely with state governments and federal government to make sure that we get the balance right. Because the truth is the economy bears the cost when we have these nuclear verdicts, and particularly when the money goes back to sovereign wealth funds and others that are funding litigation instead of to the injured parties. And everyone bears the cost of that because the loss cost goes up and the insurance cost goes up. And so I don’t think it’s really in anyone’s interest. 

Lucy
And it’s something we as an overall industry need to continue to stay vigilant on. And there’s been some signs of good progress this year on that front. Took a long time to build to this point. It will not change overnight, but we’ve got to keep looking at it. 

Sandy
Yep, absolutely. That’s an issue that we’ve been researching as well. And the verdict numbers, just the percentages of how they’ve gone up, it’s definitely something that is sobering. Very sobering, Very sobering. All Right. So we’ve talked about a lot of changes, changing risk. Any final thoughts on just the industry as a whole, how it should be adapting and evolving to continue to meet and prepare for the risk? 

Lucy
Yeah, I mean, I guess what comes to mind for me when you ask that is people, at the end of the day this is going to be. We talked a bit about machines and data, but this is an industry that in particular requires good judgment. And a lot of the work that I had been doing even before I joined Axe l was really around taking a different look at talent and understanding people as collection of skills and proficiencies in different skills as opposed to the job family that they’re currently working in because it often masks people’s backgrounds or skills that they’ve picked up inside or outside of their career. And with the world around us changing, and particularly the digital advances and data advances, the half life of skills is shortening every single year. 

Lucy
And so one of the things that’s really on my mind is around investing in the tremendous talent we have today because even the individuals that are at the top of their game today deserve and need investment in their skills in order to maintain that kind of leading edge capability. And so we’re spending a lot of time thinking about a skills oriented talent framework and how we can be really clear about the investments we make individuals and how that helps them sort of climb the jungle gym of career ladders as opposed to just a linear up and down career ladder. So that’s very much top of mind to me and probably linked to that is how can we become more and more conversant and educated on some of these new technologies and data capabilities. 

Lucy
I’ve spent a lot of my last year investing in my own understanding of generative AI and what it is and what it can do. And I think that’s a journey that I’m only inning one on and I think we’re all needing to invest in upskilling ourselves in these ways. 

Sandy
Yeah, it’s definitely a daunting endeavor to set yourself out to learn about it. But it’s obvious I found it to be really fun. 

Lucy
Like I guess I would argue challenge the word daunting because it’s fascinating and it applies to all aspects of our life, our personal lives, our professional lives. And frankly, it’s really cool what these tools can do and how they can make us bionic as individuals. And that’s pretty powerful. 

Sandy
Yeah, it’s definitely, that’s a great description and I love the way that you describe the career path as a jungle gym because, you know, it’s finding those creative outlets and what people can do. And when you add these tools and if they learn to use them, then it’s. Who knows? 

Lucy
Yeah, yeah. The world is their oyster. 

Sandy
There you go. 

Lucy
Yeah. 

Sandy
Well, Lucy, it was so great chatting with you. Congratulations on the new role. We’re very excited to see, you know, where you take the company. So thanks so much for chatting with me. 

Lucy
It’s my pleasure. Thanks for inviting me and look forward to continuing the conversation. 

Sandy
Yes, that was Lucy Pilko, CEO for Insurance in the Americas at AXA XL.

For more in our AXA XL podcast series, find us on Spotify, SoundCloud and Apple Podcast or visit leadersedge.com.