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It is in our DNA to serve our members as a priority without maximizing profits or dividends

Interview with Frederic Melle, Chief Product Officer at AMMA Insurance

AMMA may be the market leader in medical professional liability in Belgium, due to the nature of its activities and organizational structure, it remains a maverick and niche player. That has its advantages, according to Chief Product Officer Frederic Melle: "At many insurance companies, digitalization is primarily aimed at cost savings or commercial opportunities. Because we have a different business model and are less focused on making a profit (even if we deliver positive results since 27 years), we at AMMA can start from the needs of our customers. Digitalization is a great opportunity to improve the user experience."

No fewer than 64,000 individual healthcare providers (doctors and paramedics) and healthcare institutions (nursing homes, private hospitals, community health centers...) in Belgium insure their professional and private risks with AMMA Insurance. This market leadership should come as no surprise, since AMMA was founded in 1944 on the initiative of healthcare providers with the aim of efficiently addressing the insurance needs of the medical corps.

The result is a particularly legal status. "Most insurance companies are commercial limited liability and have to distribute a return to their shareholders," says Frederic Melle. "AMMA, on the other hand, is a mutual insurance company. We have no shareholders, but so-called societarians - our customers or members, that is. This means that we only have to align two parties: Amma and the societarians, who have voting rights at the general assembly, but are not shareholders."

No traditional shareholders at AMMA, so no pursuit of profit?

Frederic Melle: "Making distributable profit is not our priority; that's true. Yet, we have delivered small but positive results for almost three decades. What we retain, we invest in our coverages or in our services to our societarians. That makes a big difference in mindset. Of course, we do not have exclusive rights to products related to medical professional liability; commercial insurance companies also offer some of these products, although that usually concerns the simplest, relatively risk-free coverages. That does make us the only player that insures the entire sector in all its facets. Our goal is to offer a total package to our customers."

"Data by no means tells you everything"

Does that also mean that your role as Chief Product Officer at AMMA looks fundamentally different from the commercial insurance companies where you worked before?

"Before joining AMMA in late 2021, I earned my spurs in different roles at companies like Ag Insurance AXA and Belfius Insurance, among others. For AMMA, the role of Chief Product Officer is new and quite comprehensive: I am responsible for our product strategy and development, operations, portfolio management, project management... A considerable package, but also a logical combination because when you talk about an insurance product you immediately talk about pricing, underwriting and services."

"In the past, the role of a Chief Product Officer could perhaps best be compared to that of a orchestra conductor: you had to have an understanding of IT, of risk, of marketing... It was your job to align all the internal services and make them work together to provide a solution for the customer's needs. If anything, that role has become even more complex. Now you get more and more questions around compliance, you have to find a balance between what is strategic and what is tactical, and you have to know exactly what the customer wants by using more and more data. There's an immediate caveat to that: data by no means tells you everything."

"In my role, you need to know and convey the bigger picture within and outside the organization. That increases the relative weight, the added value of the role within any insurance company. In the insurance industry, it is difficult to make a product truly concrete. If you manufacture a car, you know what's in front of you. If you make an insurance policy, you make a mere piece of paper with a promise to deliver if the worst happens. Or even less than that, in these digital times." ( laughs)

Data allows for customization. Does that apply to AMMA as well as to other insurance companies?

"In general, insurance companies want to work as much as possible on a customized basis to ensure proper coverage. For that, of course, you have to know and follow up on the client's needs. For example, if your house increases in value due to renovations, you also want to insure it extra. If you don't, you can get into trouble as the major floods of 2021 proved: homes were destroyed that were not correctly insured, sometimes content coverage was barely a few thousand euros. An insurer should be able to proactively indicate that is not the best way to provide good insurance. Data and new technologies allow us to do that. Nowadays, it is pretty easy to know that a first baby is on the way based on a person's purchasing or net search behavior. Based on that info, it is possible to make specific offers to help customers adding their relatives to their hospitalization insurance in due time."

"The difference with other insurance products is that in medical professional liability there is less segmentation"

"At AMMA, those opportunities to leverage new technologies to correctly assess an insurance need are more limited. Not only because those technologies are not always solid enough to use already. It's also because our core product, medical professional liability, is a long-term product. We use more unstructured data and the insurance demand is both more specific and more complex than a home or car insurance. One of the projects I lead as Chief Product Officer is precisely aimed at better understanding the technical price of a risk. The difference with other insurance products is that in medical professional liability there is less segmentation, even though AMMA, as a market leader, has the greatest knowledge in this industry and therefore also the highest level of segmentation."

Do you assess risk by estimating professionalism of the insured?

"No ( laughs). We can ask a number of questions, but anyone who practices a medical profession is considered to have sufficient knowledge - as evidenced by their diploma. One difference we do make is the type of procedure or specialty a person performs. Some are more risky than others."

"When we talk about medical professional liability, we are dealing more with an underwriting issue than a pricing issue. Fortunately, we are in a country where the frequency of risk remains low. Our doctors do a pretty good job. That's not the case in every country, and you have to adjust your underwriting or your pricing accordingly."

"Even though we now have more data than ever before and could make almost unique, personalized proposals for some insurance products, it doesn't work that way. Firstly, because insurance is based on solidarity, by definition. Secondly, because the legislator prevents us from going that far in segmentation."

How does AMMA adjust pricing to the risk profile?

"I'm in favor of people paying for what they use. If I use more insurance than someone else, then I should pay more. It is up to us to adjust our pricing with our unstructured data so that our solution matches someone's usage, their consumption of insurance, as accurately as possible. However, we have to keep in mind that we are still a mutual insurance company. Our goal is not to make a profit, but to offer the best service and the best insurance. And yes, there are always outliers that we have to manage."

"Without insurance, the world as we know it would not properly function"

Dynamic pricing is no easy task for AMMA?

"Dynamic pricing is mostly a big word. In fact, it boils down to striving for fair pricing based on usage. Professional liability in general, and medical professional liability in particular, are difficult products. Our products are there to protect the medical profession. In case of claims, it is therefore important to know who is responsible for what. With us, this is a lot more complex than when insuring a house or a car, where you know where you stand after a few weeks or months in case of damage. In the medical field, it is not always so clear, because a patient comes with an ailment and if it deteriorates, it is hardly ever the doctor's fault. But yes, we are human beings and we want someone to be responsible when things go wrong. That's why we also call on various experts to get to the truth - and that takes time. The fact that in medical professional liability you're talking about people, about health, about life, doesn't make it any easier."

Why is insurance such an interesting sector?

"Imagine a world without insurance. If you wreck your car, you immediately would have to pay 30,000 euros for a new one. If you can't go to work after an accident, you're on your own... Without insurance, the world as we know it would not properly function. Insurance is a safety net against poverty. AMMA helps doctors, surgeons, and nursing staff to do their jobs. That is our raison d'être. You should know that there are countries where doctors refuse to perform certain procedures because it would increase their insurance costs - that fortunately doesn't exist with us."

Do you see opportunities to develop new products or services?

"I've been working at AMMA for a year and a half now and I'm fully engaged in updating and adapting our products to new practices such as telehealth and other new tools that we want to integrate. We have set a roadmap that we intend to deliver timely. And, of course, there's also digitalization that provides new opportunities."

"Our business model allows us to first respond to our clients' needs and not look at profits first"

What challenges does digitization pose for AMMA?

"Most of the digitalization efforts in insurance products are linked to a sales business plan aimed at recovering the investments, which makes economic sense. At AMMA, that's not the best way of working, because our societarians, our customers don't ask to buy their products digitally, they ask to get a good service. When we talk about digitalization, we first and foremost look at the needs of the societarians."

"By the way, this is something that is changing in the industry in general. Many insurance companies still emphasize digitalization from the inside out, ultimately aiming to save costs. However, there is a growing realization that there is more to be gained from digitalization by improving customer service and experience. Often, the small extra investment is not made in practice to save costs. AMMA's business model is different in that regard, and that does make a difference. Our business model allows us to first respond to our clients' needs and not look at profits first. The entire digitization process at AMMA starts with mapping out the needs of our members and translating that into a customer journey to formulate a solution. The biggest challenge for a company like AMMA is time and resources. We are around 70 people and cannot tackle everything at once. So, it takes some time to get everything in order and bring us to where our clients want us to be."

What is that time horizon?

"We have a request for proposal (RFP) that determines what we expect in our IT-packages, what we need to serve our societarians. Currently, we are in talks with potential suppliers and need to determine whether to invest in our current IT system or switch to another package. Only once that strategic question is answered, can we discuss implementation. It is a total initiative to rationalize our portfolio and better map our processes."

"The biggest challenge is not the tool, but the human acceptance - that's a black box"

Will artificial intelligence or ChatGPT play a role?

"We have already deployed AI to recognize handwriting on documents, but you know the writing of a lot of doctors don't you? That doesn't work so well ( laughs). We will use that capacity for our pricing though, to exchange more interactive information between doctors and us, to rationalize documents. To be honest, we're not a forerunner in that regard. Nor do we want or need to be. In time, documents as we know them today will disappear and physician input will be completely digital."

"To me, technology is nothing more or nothing less than a tool. ChatGPT and the mathematical models I used as an actuary are the tools. I think the biggest challenge is not the tool, but the human acceptance - that's a black box. When you create a new pricing model, almost all societies now use a GLM mathematical model that is easy to implement in packages available on the market. It is not the best tool technically, but commercially it is: it allows us to better explain to the customer how the price is composed. And this brings me to another point specific to our sector: we always have to justify how a price is composed. I think that's strange. Do you ask Apple where their price comes from?"

The medical sector is changing rapidly: there are online appointments, the profession is becoming more female-dominated, there are more group practices ... Does that have an impact on the risks that AMMA assesses?

"It doesn't immediately affect risk, but it does affect the expectations of our members. The frequency of damage remains low compared to other countries. New risks can be found in telehealth, but also in the event of a cyberattack. What happens if medical personnel cannot access crucial elements in medical records? We also have a cyber plan to ensure that we are well protected. This is crucial because for all insurance companies, data is the source of good work."

Frederic's data

  • 27 / 27 minutes is my time to commute by bike since I ditched my car. It is really enjoyable to be outside twice a day doing some sports and to have a predictable commute time and in a more climate friendly way. Moreover, it does not rain a lot in Belgium, that is a myth.
  • 42 / 42 is the answer to the "ultimate question of life, the universe, and everything", a joke in Douglas Adams' 1979 novel, The Hitchhiker's Guide to the Galaxy. It is a completely meaningless response to a very essential question 'What is the meaning of life?'. Maybe live it rather than rationalize it. Carpe diem.
  • 2+1 / I have 2 kids and will be father again in a few months. Great news!
  • 18 / It is the number of years since I married my wife Sophie. I love those first 18 years with her and cannot wait to see how the next 18 and more years are going to be.

About data

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