After responding to shareholder concerns by cancelling its decision to expand in China, I have been expecting a further update from Insurance Australia Group Ltd (ASX: IAG) to clarify the company's plans for the future.
Yesterday's non-market sensitive update did not disappoint, although the reshuffle appears to be largely a cosmetic change, adjusting who is responsible for what among existing board members.
Here's what you need to know:
- Going forward, IAG will have two customer-facing divisions responsible for sales, service, and brand marketing; Australian Consumer Division, and Australian Business Division (segment reporting will remain the same)
- Three divisions – Customer Labs, Digital Labs, and Operations will support the two customer-facing divisions
- IAG's Asia and New Zealand businesses will move into a new International Division, with responsibility for growing its presence in Malaysia, Thailand, India, Indonesia, and Vietnam
- There are a significant number of executive reshuffles with staff moving into different (some newly created) roles and also picking up additional responsibilities
I'm most excited about the Customer Labs and Digital Labs divisions, which together will be responsible for customer experience and product innovation.
A focus on data and improving the customer experience combined with new products, ventures and digital apps are likely to have incremental benefits for IAG and its shareholders. Indeed, this was one of the key recommendations of Ernst & Young's recent report on the global insurance industry.
However, the majority of the changes – including the renamed Customer Labs and Digital Labs – appear to be largely cosmetic. Over time the change will likely generate benefits for IAG as a result of a renewed focus and more efficient allocation of responsibilities, but I don't believe there will be an overnight improvement.
Now What?
As I mentioned in the above hyperlink, QBE Insurance Group Ltd (ASX: QBE) appears to be the best of the insurers on the ASX today. IAG and Suncorp Group Ltd (ASX: SUN) are too focused on Australia, which is a region that faces significant headwinds and competition in the insurance space over the next few years.
