The Covid-19 crisis highlighted the importance of adapting to the rapidly changing needs of New Zealanders. At AA Insurance, we were one of the first insurers to announce our customer response to the crisis.
I recently had the pleasure of sharing the background to our response with other Insurance & Financial Services Ombudsman members during a Q&A webinar. This included discussing how purpose in a crisis can help to galvanise staff, investing in staff engagement, diversity and flexibility, and the pay offs that has provided in terms of culture, customer experience, and trust. Here’s an extended version of the webinar:
On 17 April, AA Insurance responded to customers in crisis by announcing a premium freeze, hardship fund and premium refund. How did you come to this position so early?
Things happened very quickly, and we were keeping a close eye on what customers were saying to us. Our management team were meeting at the start of each day to assess what was happening across the business. And we were meeting with our board every week to monitor things and to ensure we had quick decision-making as the situation developed.
It became clear very early that many customers were already being affected by the economic impacts – reduced or no income, losing their jobs – as examples. We also hadn’t anticipated the huge effect of the lockdown on driving behaviour. Car insurance claims plummeted as people stayed home.
We very quickly determined three initiatives that we strongly felt were the right things to do to help customers. Firstly, we knew that some of our customers were now facing genuine financial hardship, so we announced a Hardship Fund of $2M. Secondly, we froze premium increases for car, home and contents insurance while the current alert levels were in place. It didn’t feel right to keep increasing premiums during the lockdown as the risk environment had fundamentally changed. And finally, we wanted to ensure that AA Insurance didn’t benefit from lower car claims at the expense of our customers, so we committed to give back a portion of premium to car insurance customers after the financial year end, which will be a significant amount.
The fundamental reason we were able to make these decisions and make them quickly lies in our organisational DNA. For over a decade AA Insurance has embedded a culture based on values of being genuine and having the courage to do the right thing. And we have also worked really hard to deeply embed our purpose, which is to ‘care, help and get to things sorted’. From the board down through the organisation. This made the decision making simple and fast. We truly believe in those fundamental elements, so there was no debate. There was overwhelming support to do the right thing.
This is not AA Insurance’s first crisis response, but how did it compare?
There really isn’t any comparison to the Covid-19 crisis. It’s quite unique.
In the 25 years that AA Insurance has been operating we’ve faced many events, like the Auckland power crisis, the Christchurch and Kaikoura earthquakes to name a few. The Covid crisis is completely different because it’s not a claims event affecting a region of New Zealand. This event affects the whole country in ways we had never anticipated.
Rather than swarming our people to a huge increase in claims such as in an earthquake, our immediate focus needed to be getting people working effectively from their homes. Then we had the unusual situation where we saw the huge reduction in car claims. Hence our decision to give premium back to our car insurance customers because the risk of having a claim was so much lower.
Looking back over the years and the many events we’ve faced, and that’s true of the Covid crisis too, I’ve witnessed the galvanising effect of such situations. If you have the hearts and minds of your people genuinely guided by purpose and values, you will be resilient to anything that challenges you. In fact, the way we have responded to our customers during this crisis has created immense pride for our 750 people.
How can crises galvanise an organisation and staff?
My experience is that organisations that have a strong culture, high engagement and embedded purpose come out of these challenges stronger and with improved performance across every metric. I believe we respond well in crisis situations because our people are truly engaged and we are totally driven by our purpose to care, help and get things sorted.
At AA Insurance we are always looking to galvanise around something truly meaningful. Sometimes that’s a crisis but sometimes it’s not. For example, we try very hard to differentiate ourselves from the typical industry stereotype. We always challenge ourselves to respond to a problem or opportunity by being different. At AA Insurance, we never want to stand still, we always strive to be a better organisation for our people and customers.
From a people perspective, this crisis and others like the Canterbury earthquakes, has had a hugely galvanising impact. In our latest staff survey a few weeks ago, we’ve had our highest engagement result in our history, including 98% of our people saying they are proud to work for AA Insurance, and would recommend it as a great place to work.
What’s been your strategy of active engagement with the staff?
It’s important to recognise that we have worked hard over many years to create the culture and engagement we have today.
Everyone knows that culture and purpose are critical elements of driving performance and being able to respond to crises. It sounds very simple. But it’s not. It has taken us many years of persistent focus on these things. There are no silver bullets.
I’ve learned you have to be determined, resilient and persistent over a long period to get the fundamentals right. You must water the cultural garden to ensure its always nourished. Set and forget doesn’t work. Things don’t always go according to plan, but you must pick yourself up and stay the course.
A few years ago, we realised we had some problems to address. For example, our staff turnover was high and that was inefficient and led to inconsistent customer service outcomes. So, we developed an focus on growing our own talent. This meant recruiting good people into our contact centre, then creating career opportunities across the business to ensure higher retention. Now we have people moving from front line service roles into specialist roles across areas like marketing, communications, pricing, finance, pricing etc.
We also proactively rotate people into different roles to ensure their development, to keep them challenged and refreshed and to build capability across the business. Our staff retention is the highest in our history and our people have learned the fundamentals while knowing they have great career opportunities without looking outside AA Insurance.
What have been the payoffs of AA Insurance’s ‘grow your own talent’ policy and engagement strategy in a crisis?
This ‘grow our own talent’ policy has also allowed us to respond well in times of crisis. It has allowed us to swarm people to areas of need because the majority of our people have been through a progression through many areas of the business.
I’m a strong believer that investing significant time and resources in people and engagement is the most critical element of a successful business. We haven’t always had this right and during these times our business struggled with results being poor and inconsistent.
There is an absolute correlation between high engagement and superior business results. That’s why we pay so much attention to this. High engagement and a deeply embedded purpose are the critical ingredients of the secret sauce of success in my opinion. Spend time of these two things and the growth and profit that your shareholders require will be an outcome.
Key learnings during this crisis?
Firstly, when faced with a crisis, it’s amazing what you can achieve in a very short timeframe. I’m astounded at how people just get on and crash through barriers to make things happen.
Secondly, working from home has real benefits to many people. I’m certain we will have many more people taking up this option in future.
Most importantly, when you do the right thing for customers, it really resonates with your people and makes them proud of the organisation.
About AA Insurance
AA Insurance is an independently operated, New Zealand-based joint venture between the New Zealand Automobile Association (NZAA) and Vero Insurance New Zealand Limited (VINZL). Since 1994 we have demonstrated trusted expertise in home, contents and car insurance in New Zealand, and in 2018 introduced commercial small business insurance. We underwrite our own policies and sell direct to New Zealanders. Our 930+ staff look after over 480,000 customers with 970,000 policies.
We proudly partner with Variety NZ and Eden Park and have been consistently recognised by: Reader’s Digest Most Trusted Brands (since 2011) and Quality Service Awards for Car, and Home and Contents Insurance (since 2015), Kantar Customer Leadership Index (since 2019), Canstar Blue Most Satisfied Customers (2011-2018), and the Colmar Brunton Corporate Reputation Index (since 2015) that recognises New Zealand’s most successful companies. AA Insurance was also named Consumer NZ People’s Choice award winner for car, home and contents (2019 and 2020).
AA Insurance has an AA- (Very Strong) Insurer Financial Strength Rating given by Standard and Poor’s (Australia) Pty Ltd. For further information visit aainsurance.co.nz.
For more information please contact:
Rachael Joel, Botica Butler Raudon Partners, (09) 303 3862, 021 403 504 or rachaelJ@botica.co.nz
Amanda Fifield, AA Insurance, 027 406 1787, firstname.lastname@example.org