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Profile of a chief executive:
Wolfgang Weiler (HUK-Coburg)
This article by Andrew Bibby, in a slightly different form, was first published by ICMIF (International Cooperative & Mutual Insurance Federation) in Voice magazine, 2011
It would be understandable if many chief executives felt a moment of nervousness in the run-up to the ritual of presenting their annual accounts to the serried ranks of business journalists and analysts. But Wolfgang Weiler must surely have approached his company's press conference in Munich this May with a spring in his step. At a time of great competition in the German insurance market, he had the pleasant task of sharing the news that HUK-COBURG had once again performed very well. The mutual, based in the small southern German town of Coburg , had fought off the competition to occupy the coveted position as the number one insurer of motor vehicles.
Eight million seven hundred thousand vehicles on Germany 's roads are now insured through HUK-COBURG, with the numbers having increased by over 4% during the course of 2010. Motor insurance has always been a key part of HUK-COBURG's business – indeed, it was because they wanted affordable car insurance that a small group of teachers and clergymen came together in 1933 to create the mutual – but the recent growth in business for HUK-COBURG comes at a time when the overall market has barely grown (only 1.5% in 2010). Indeed the number of new car registrations in Germany has fallen recently, down by almost a quarter in 2010 compared with the year before.
The growth in motor policies was, Wolfgang Weiler admitted to his audience, above the company's own targets for the year. “For the fourth year running, we have attracted over a million new contracts,” he said. But he added that he wasn't obsessed at the idea of overtaking rival insurance providers. What was more satisfying, he said, was the vote of confidence by consumers in the company which the growth in business represented.
In fact, the motor insurance business in Germany has seen enormous competitive tendencies in recent years, with very great pressure on premium rates. How does HUK-COBURG manage to cope? “Our big advantage is that we have very low costs and an excellent claims management record. This means that we are able to withstand price competition very successfully, without plunging into the red,” he says. Nevertheless, he adds that margins have inevitably been shrinking, not least because the number of claims has significantly increased recently.
HUK-COBURG offers one very popular way of helping its policyholders keep down the costs of their motor insurance. Normally motorists can choose where to take their cars for repair after an accident. But HUK-COBURG has recently developed its own network of car repair shops, about 1200 across the whole of Germany , and customers who agree to use this network get a significant discount on their premiums. “These repair shops offer a high level of quality and give us very favourable prices, as we are able to guarantee them business. The favourable prices are passed on to our customers,” Wolfgang Weiler explains. Currently about half of HUK-COBURG's motorist customers opt for this policy.
Wolfgang Weiler stresses the crucial importance of delivering a high quality of customer service to his policyholders. “Customer needs have changed,” he says. “It is no longer sufficient simply to settle the claims. The customer now expects additional service. An insurer who has adjusted to this fact can take advantage of new opportunities.” Satisfied customers and reduced claims mean in turn that there is scope for favourable premium prices, he explains.
Nevertheless, he is certainly not complacent. “We are mainly operating in markets which are barely growing or which are even declining. The number of cars is barely rising. When there are limited growth opportunities and consumers are price-sensitive, cut-throat competition is the consequence. This competition is determined mainly by price. We feel well-prepared for that, but we will have to keep our processes efficient and our costs low,” he says.
Wolfgang Weiler took over the post of chief executive in June 2008 on the retirement of Rolf-Peter Hoenen, who had led HUK-COBURG for more than eighteen years and had overseen a major period of expansion for the mutual( Voice 62). Dr Weiler himself is now in his late-fifties, having grown up in the small town of Andernach on the left bank of the Rhine , in the German state of Rheinland-Pfalz (Rheinland Palatinate). He studied in Cologne, leaving with a degree in Business Administration, and then went on to undertake a doctorate before joining the insurance world, first working as chief internal auditor at the former Colonia Insurance and then becoming head of finance and accounting at Kölnischen Rück (Cologne Re). But in 1988 he made the move to HUK-COBURG, joining the Board a year later. His responsibilities at HUK-COBURG have involved almost the full range of the insurer's activities, including investment management, property management, corporate planning and accounting and taxation. It has proved an extremely valuable springboard for his role in providing the strategic leadership to his organisation.
If Dr Weiler was able to report good progress at the May press conference in relation to motor insurance, he also had encouraging news in relation to HUK-COBURG's other areas of business. The company is well-placed in the German market for property and accident insurance, and here again there was growth to report. It also has a strong presence in legal insurance, as well as subsidiaries which offer health insurance and life policies. Finally, there is also the mortgage savings bank which it operates.
All this, as Wolfgang Weiler was able to tell his press conference, amounts to a significant operation: HUK-COBURG's premium income for the first time topped the five billion euros mark (USD 7.25 bn) in 2010.
Last year also marked the tenth anniversary of the launch of HUK-COBURG's innovative online operation, known as HUK24, which over the past decade has developed into a significant distribution channel for the insurer's products. 1.7 million vehicles are insured through HUK24, for example, and for motorists who are happy to deal with their insurer in an online environment there are significant cost savings to enjoy over the company's more conventional products. However HUK24's policyholders can call on the services of the whole group when they need help, including the network of local offices and the car repair partners.
It is because of the growing importance in Germany of the internet in insurance purchase that HUK-COBURG has chosen to make its latest acquisition. Earlier this year the news came through that the competition authorities had approved the plans for HUK-COBURG, working in partnership with two other insurers, to acquire control of the online price comparison portal Aspect Online. The reality today, according to Wolfgang Weiler, is that almost half of the insurance policies sold online are sold through price comparison websites – and the problem for insurers is that these portals have been able to command very high commissions, as much as EUR75 – EUR 100 (USD 108-144) for each sale. Not only that, but portals are also encouraging customers to come back to them when insurance renewal time comes around. It means that the commission charges have to be spread across only two or three years' worth of premiums, the average time that online customers are likely to stay loyal.
“Aggregators such as Aspect Online are becoming increasingly important for the consumer. However, this distribution channel is not a cheap one and at present one portal is the clear market leader and able to set the terms and conditions. Our participation in Aspect Online aims at strengthening competition among the portals. We are happy that we have found two other insurers who have taken a similar view of the situation as us,” Wolfgang Weiler explains. Despite the change in ownership, Aspect Online will continue to operate as an objective independent comparison site.
Although HUK-COBURG took the decision as far back as 1977 to make its products available to all, it remains a mutual dedicated to civil servants and other public sector workers who make up the organisation's membership. “We feel committed to the principle of mutuality, which governs our corporate activities. As a mutual insurer our company is not owned by investors whose expectations on financial performance and yield we would otherwise have to consider. Instead HUK-COBURG is able to pursue the objective for which it was founded: offering the consumers insurance products which are tailored to their specific needs at most favourable conditions in terms of benefits, price and service,” Wolfgang Weiler says. Coburg remains the head office of the insurer, and 4642 out of the total staffing complement of about 8,500 work here. The remainder operate either in the emergency customer assistance centre in Frankfurt, or in the local and regional offices across Germany .
Dr Weiler stresses their contribution to his company's performance. “HUK-COBURG's success is due to our staff. Our qualified, performance-orientated and motivated people enable us to achieve our corporate goals,” he says. He adds that the company has been concerned in recent years to institute a family-friendly human resources policy, to enable staff to achieve the best possible work-life balance.
For Dr Weiler too there is life outside the workplace. He says that he enjoys going to the theatre, as well as music and literature. The beautiful Bavarian countryside near Coburg offers other possibilities: “I like jogging, taking bike rides and skiing - and I like going for walks with my wife, and with our dog,” he says with a smile.
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