Fit for the future
Reducing costs and increasing efficiency in Austria
A thorough restructuring of the cost base and optimisation of our existing business represent a significant element of UNIQA 3.0 and a key prerequisite for achieving the ambitious objectives under the programme. We must reduce high administrative costs at times of negative yields on government bonds, which threaten the income of both our clients and our shareholders. We have the potential of catching up with our biggest competitors here, including in an international comparison. Overall, we will make a net saving of €50 million per year in administration costs compared with 2019. The majority of this will be achieved in Austria.
Measured against the cost base for 2019, this equates to a highly ambitious reduction in administrative costs of just under 10 per cent. Since there are high investments for IT and the fulfilment of new regulatory requirements at the same time, this means a reduction target of around €125 million gross per year, which we must achieve by 2022. 70 per cent of this – i.e. approximately €85 million per year – relate to material costs, and around 30 per cent, i.e. €40 million, to personnel costs. This means a reduction in our headcount in Austria by around 600 full-time employees.
All areas of the company will play their part in reducing these costs, from sales and IT, which will be affected the most in absolute terms, to finance and general administration. In terms of cost types, the focus is on external IT and other consulting costs, which will be saved primarily through restructuring and increased implementation of projects using internal resources. Optimisation of our sites across Austria will be another key factor.
We are aiming for a total cost ratio of 25 per cent overall in relation to premium volume across the Group by 2025, which is a reduction of around four percentage points compared with current levels. However, this does not detract from our goal of positioning ourselves as the best service provider and most attractive employer in the industry. This is ensured by the targeted streamlining of our organisation, extensive process simplifications and market access focused strictly on the customer, as well as simplification and standardisation of our product portfolio and optimisation of our pricing.
Broad combination of measures
These overall objectives include a wealth of individual measures that run through all of UNIQA’s business areas and activities in Austria:
- Optimisation of our location network is one key area for action. Examples include the closure of 35 service centres and the development of successful field sales employees into general agencies. In addition, just three hubs (West, Central and East) will perform partner service, HR and administrative tasks in future instead of nine regional offices.
These measures will both reduce personnel costs, and also enable significant savings in material costs. In addition, strict cost discipline will contribute to the fulfilment of the objectives at the regional office level.
Further savings in personnel and also in material costs are intended to ensure streamlining and also strict cost discipline at head office.
- We are also planning a series of improvements in sales alongside this: combined with the development of successful field sales employees mentioned above, we are setting our sights here on a future growth course for the profitable agency route. This not only increases our local presence, but also reduces our administrative costs at the same time. Further savings will be made by adjusting the span of management in field sales. In future, we also want to manage our cooperation with brokers based on the evaluation of individual earnings.
- We will be consolidating market research, product marketing, product development, pricing, sales and customer management by customer groups (Retail/Corporate) in a single department in each case going forward in an effort to ensure that our product policy and sales management is even more targeted. This end-to-end focus is intended to make our decision-making processes and the implementation of adopted measures much more efficient and effective.
We are also planning to streamline our entire product landscape and give it a modular design at the same time. The development of the product landscape is facilitated by daily customer surveys that provide ongoing input and also enable a feedback process for measures and any corrections that may be required. We will be realigning customer loyalty based on our new CRM system and the highly successful myUNIQAplus app. In addition to serving our loyal regular customers, we will be placing a special focus on new customers under the age of 27, as we still see catch-up potential in the insurance sector among this group.
We will in future create earnings forecasts at the level of individual clients and link these directly to our pricing regulations so as not to lose sight of earnings when expanding our client portfolio. We are not least ensuring a positive risk selection through this. In general, we are focusing on risk-appropriate pricing in line with the market, with a short time-to-market as well as a consistent pricing system across all sales channels.