HDI sets its sights on ASEAN expansion

Globally, industrial insurer HDI Global SE handles more than 3,500 international insurance programmes and recorded a gross written premium volume of about Euro 4.3 billion in 2016. Yet this is a company that isn’t satisfied with its current level of growth.

With over 110 years of history, HDI is still in expansion mode. Jonathan Jackson speaks with Regional Head Australasia & ASEAN and Managing Director HDI Global SE, Australia Stefan Feldmann and Managing Director at HDI Global SE Singapore Graham Silton about the company’s ambitions in South East Asia.

The overarching message coming out of the HDI offices is that HDI is very much in growth mode. Founded in 1903 and with a substantial foothold across Europe, HDI operates through foreign branches, subsidiaries and affiliates as well as network partners in more than 130 countries worldwide, offering international industrial insurance programmes.

Born as a mutual insurer of the German iron and steel industries, HDI has continued to morph into one of the most respected and leading insurers offering a broad and needs-based range of insurance solutions. The eponymous Liability Association of German Industry remains the majority shareholder of HDI Global SE’s parent company, the EUR 8.5 billion capped Talanx which is also the parent company of the global reinsurance giant Hannover Re.

Talanx is Germany’s third largest insurance group and among the top 10 in Europe.

In its homeland of Germany and throughout the rest of Europe, HDI is a leading industrial insurer and insures most of the DAX (German Stock Exchange) 30 companies.

That gives you a sense of this company’s size, but a company doesn’t dominate an industry without constant forward momentum.

Part of this momentum has been due to its foundations: “We were created by industry for industry,” says Regional Head Australasia & ASEAN Stefan Feldmann.

It has also been the company’s ability to hold true to its original values, whilst keeping pace with changing times.

“From the very beginning, we have set highest priority in a continuous communication with our customers, as we want to create individual solutions, understand if the risk situation changes, and if the coverage we offer has to  be adjusted. Hearing from our clients that they appreciate this close dialogue, we anticipate being in a good position to move forward,” Feldmann says. In 2016, the industrial insurer already generated about 61 percent of its gross premium volume in international markets. By 2019, HDI is aiming to increase the portion of non-German business to about 65 percent.

The company is clearly well respected in Europe, but South East Asia is a burgeoning and promising market.

The countries that comprise the ASEAN Region represent a thriving trade and economic hub. More than 634 million people live in ASEAN alone. To put that in perspective, there are 261 million people in Indonesia, the most populous country in ASEAN and also the 4th most populous country in the world. Indonesia is the only member of G-20 major economies and the largest economy in the region. ASEAN alone has a GDP of US$2.55 trillion (Australia, US$ 1.2 trillion, EU US$16.5 trillion). If ASEAN were one country, it would be the world’s fifth-largest economy.

The region has an average annual economic growth rate of more than five percent over the last decade.

Moving into the region makes sense and HDI has made some ground in Australasia over the past few years already.

“As a big European-based insurer we were quite under- represented in Australasia when we restarted the HDI brand in 2010,” Feldmann says.

Fast-forward to today and staff numbers have multiplied from 8 to over 50 and premium volume has expanded more than seven times complemented by solid underwriting returns.

According to Feldmann, the strong profitability of HDI’s local portfolio allows the company to be entrepreneurial and open for new business as the corporate insurance market is firming and many competitors need to take corrective actions and re-underwrite their books.

To further its growth trajectory and to be even closer to its clients and brokers, HDI has opened new offices in Melbourne and Brisbane in the last two years and has very ambitious plans for the region in general.

“HDI is nicely positioned to be part of the huge growth potential that clearly exists for the ASEAN region,” says new MD of HDI Global’s Singapore branch Graham Silton.

Silton who was previously the property manager in Singapore says of the region, “We are already seeing trends of greater levels of sophistication, awareness and buying styles for insurance. A trend in my opinion that will continue in the future. This means we need to be flexible, innovative and proactive in meeting our clients’ needs. In order to profitably grow we will continuously examine our product offering and accessibility to market. Success would be measured when HDI is considered a carrier of choice.”

As it looks to apply its principles to this region, there is a confidence that it can do so with the same panache that’s been present in Europe for the last 100+ years.

Silton has big plans.

“What we hope to achieve in  the ASEAN region is to grow in all the traditional lines of industrial insurance business. We opened the Singapore unit in 2012 because we wanted to be close to our customers. Southeast Asia is experiencing a strong economic development, as are many of our clients here. We want to accompany them on their growth path by offering considerable expertise in setting up global and regional insurance programmes. By joining forces with the Australian branch in 2016, we are now able to secure larger projects and to work with more sizable customers than previously possible. We believe that this makes HDI even more attractive and will help us to further expand our business.”

HDI is a brand recognised widely in many parts of the world. However, in the ASEAN region the company is quite young, but with enormous upside.

Silton says currently the company is seen as a follow market, however there is tremendous potential.

“We intend to fully unlock this potential and position HDI as a true market leader. In the minds of our clients, be they direct clients, cedants or brokers. For us, one of our criteria of success would be when we are seen as a natural ‘ go to market of choice’ in other words top of mind.

Another measure of success will be to increase our portfolio and premium volumes very strongly within the next couple of years, whilst maintaining the excellent returns for our shareholders.

Finally, equally important is to build a great team in all areas of our business who are respected and acknowledged by our industry peers and clients as best in class.”

To iterate the point further, Feldmann says while the company is huge in industrial insurance in Europe the ASEAN market is one that HDI can help to slowly blossom.

The aim here is to become a reinsurer of choice.

“There is a great need for reinsurance support here, so what we do is identify local market champions and empower those companies within that market. We think and act like a direct insurer and we help our local partners with our technical expertise and reinsurance capacity. We work closely with the direct insurers within the ASEAN region and assist them to become leaders for corporate business in their home markets.”

“I would go as far as saying that we work with local markets to allow them to blossom and become a lead insurer,” Feldmann says.

“We allow our clients to work with the local insurance market to enable them to grow in the corporate insurance space with our support. We partner up with one or two companies and give them European expertise.”

HDI is built on a global approach.

It is also built on relationships and closeness to its customers – an essential ingredient in HDI’s development.

“We have developed an international network of local experts who have a deep understanding of the market and its conditions,” Silton says. “We are therefore able to support clients across national borders, giving them expert advice on their foreign target markets and creating an insurance strategy to suit their individual needs. This requirement is increasingly becoming a priority for companies of all sizes engaged in cross-border business, but only a few international industrial insurers have the necessary capabilities. This gives us confidence that we are in a position to offer some very interesting insurance concepts for companies and groups in the ASEAN region.”

Silton says that in order to achieve their targets HDI must have excellent knowledge of the market place and the dynamics in every country in the ASEAN region.

“Whilst SE Asia may be one region, it is not one country, we need to fully understand the economic environment, geo political landscape and business opportunities and outlook by country and execute our strategy accordingly.

“We need to grow our brand awareness and visibility. This means we need to travel and meet the right people and invest our time and resource to mirror where we yield the best return for HDI and our clients.

“We simply cannot be all things to all people, therefore we will identify those business partners in each country whom we believe have similar values and are committed to work and build a long term and sustainable relationship for all parties.

“Clients’ demands of their Insurers are continually evolving and we need to be flexible and respond accordingly. HDI has a good reputation of being highly solution focused”, said Feldmann.

As well as expanding regional markets, HDI is also focused on expanding its product lines including Cyber and Crisis Management Insurance.

HDI has lead underwriters in all major lines of corporate insurance business including Property, Construction & Engineering, Marine, Liability and Financial Lines (D&O).

“These are highly professional talents recognised as leaders in their field who are followed by the market. As for our mid- market expansion HDI tries not to pigeonhole the market in the same way as other insurers do. What a lot of insurers do, which I understand brokers never really like much – is they slice and dice the market into large corporate, mid-market and SME. We don’t need to do that.

We have one team and basically provide all of our services to our valued brokers. We want to make it easy for brokers to deal with us.”

With that in mind, Feldmann also has ambition for the company to be more proactive in the region, meaning HDI will continually review its product offering and seek to introduce new products to match the real demands and needs of its clients.

Having recently rebranded, HDI is continuously looking to strengthen its global position.

HDI-Gerling Industrie Versicherung AG was renamed HDI Global SE in January 2016 to reflect HDI’s increasingly global profile.

“In practice, by highlighting HDI’s increasing global alignment means we give more visibility to what we can bring to the market. As a big European-based company, this is especially important for non-European markets like Australasia and ASEAN. Although our business in these regions has experienced significant growth over the last years, we have not yet achieved the awareness and market share we enjoy in Germany and Europe,” Feldmann says.

And it is the ASEAN region where the challenge now lies. BFM

Business First is a peer-to-peer magazine: written by CEOs and other high level executives, with interviews with some of the country’s best leaders.

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