The AXA Way: Improving Quality of Services

The case discusses the implementation of process improvement technique called 'The
AXA Way' in AXA, a France based insurance and wealth management company. In a
span of two decades, AXA went in for several mergers and acquisitions and gained
global presence. In order to improve the quality of its services, the company launched
'AXA Way,' which involved the application of DMAIC principles. The AXA Way was a
continuous improvement program that focused on improving the existing processes
and making them more customer-oriented. The case also describes the benefits reaped
by AXA after implementing the program including cost reduction and customer
retention.
 The AXA Way: Improving Quality of Services
“If you want to innovate, you must always do so in a cost-effective, predictable way,
and for that you must master your processes. Excellent manufacturers know how to do
this. We will, too”1
- Claude Brunet, Member, AXA Management Board in 2005.
“This (AXA Way) is a powerful tool that harnesses all of the internal energies we have
to mobilize in order to step up the pace of our quest for operational excellence.”2
- Henri de Castries, Chairman, Management Board, AXA Group in 2003.

Improving Customer Satisfaction

France based insurance and investment management conglomerate; AXA Group3‟s

operations were spread across the world. In the year 2001, the company‟s German
operations had some difficulty in retaining customers. The company conducted a
survey and found that although most customers wanted to obtain accurate information
about the loss and claims processes, in writing, only 22% of the company‟s customers
were actually receiving such information. The customers also expected to receive
such information within the span of one week. However, in most cases, AXA
Germany was unable to provide the information in the specified time frame.
The main reason was that the processing of claims in the company was geared to the
needs and ease of operations of those working in the company, rather than the needs
and preferences of the customers. To overcome this problem, a team from the
company took feedback from customers on claims-related services being provided to
them. Having understood their requirements, the team devised a specimen letter,
which informed the customers about how their claim was being settled, the details of
the employee from AXA who was looking into the matter and how to go about
settling their claims. Letters on these lines were, from then on, dispatched to all the
customers who filed for claims.
The result of these efforts was instantaneous. The number of calls the customer
service center received about claims-related information reduced by half. The
retention rate increased, and customers came back to AXA. The change in the
company‟s outlook towards its customers could be attributed to „the AXA Way,‟ a
continuous improvement program launched by AXA in 2002, to achieve operational
excellence and bring about changes in its business processes based on customer
feedback.

1
Eric Monnoyer and Stefan Spang, “Manufacturing Lessons for Service Industries: An
Interview with AXA‟s Claude Brunet,” McKinsey on IT, May 2005.
2
AXA, Activity and Sustainable Report, 2003.
3
France based AXA specializes in insurance and wealth management. The company was
ranked 13th in Fortune magazine‟s Global 500 list in 2004. AXA‟s operations were spread
across Western Europe, North America and Asia Pacific. As of December 31, 2005, AXA
served over 50 million customers and had € 1064 billion in assets under management. In
2005, the company reported revenues of € 72 billion and net income of € 4.17 billion.

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Background Note
The parent company of AXA, Mutuelle Contre de l‟Assurance contre l‟incendie
(MCI), was founded in 1816 by Jacques-Théodore le Carpentier and 17 other
entrepreneurs. The company was located at Rouen4 and was established as a fire
insurance company. For a period of five years, every shareholder in the company was
both insurer and insured party. This was the beginning of a mutual company, where
the company was owned by insured parties.
With growing competition from companies like La Providence (founded in 1838) and
La Paternelle (founded in 1843), MCI decided to diversify and develop its activities.
For this purpose two companies were created, Mutualité Immobiliére and Mutualité
Mobiliére for insuring movable risks; these companies started operating in 1847. In
the 1850s, the companies expanded their activities across France and started covering
real estate risks. In 1881, the companies merged under the name Ancienne Mutuelle
(AM).
In 1922, AM began offering automobile insurance under the name - AM Accidents.
During the Second World War, in 1944, the company‟s offices were bombed by US
forces. The accident and life insurance divisions were not severely affected by the war,
but tighter controls became necessary. This led to constitution of Groupe AM in 1946,
under the leadership of André Sahut d‟Izarn. The company‟s first merger, with AM du
Calvados, took place in 1946. In the following decade, AM acquired Mutuelle
d‟Orléans, Mutualité Gérale life insurance company and La Participation.
In 1955, AM ventured overseas, starting its operations in Quebec, Canada. In 1958,
Claude Bébéar (Bébéar) joined the group as a senior manager. Bébéar was sent to
Canada on an assignment and he developed the Canadian subsidiary of AM named
Provinces Unies.
After the death of André Sahut d‟Izarn in 1972, the company went through a turbulent
period. In 1974, activities at AM were paralyzed for over two months, owing to a
strike in the company. Bébéar‟s successful resolution of the strike impressed the
board members and he was brought in as Chairman in 1975. Bébéar brought in several
changes beginnning with a change in name of the company. AM was renamed
Mutuelles Unies (MU) in 1978. In the same year, MU acquired another French
company, Compagnie Parisienne de Garantie.
By the year 1980, MU‟s turnover had reached 2.4 million francs. In 1982, MU took
over the Drouot Group5 and Bébéar was appointed as the Chairman and the CEO of
the merged entity named Mutuelles Unies Drouot (MUD). With this acquisition,
MUD emerged as the largest, non-state owned insurer in France.
MUD changed its name to AXA in 1985. The name was chosen in the light of
international expansion plans of the company as AXA was easy to pronounce in all
languages. In 1986, AXA acquired control over La Providence and Le Secours6. In
1988, AXA and Compagnie du Midi7 merged their insurance businesses. This merger

4
Rouen was the capital city of Normandy, in northwestern France, and is presently the capital
of the Haute-Normandie region.
5
Drouot Group was established in 1948 and became a conglomerate of various insurance
companies by the early 1980s. The group specialized in property casualty insurance.
6
La Providence was owned by ancient line of French aristocracy. Le Secours was an
insurance company established in 1880. AXA acquired these companies after a long
takeover battle.
7
A subsidiary of Assurances du Groupe De Paris, la Compagnie du Midi, had significant
presence in the European markets. The company had major presence in the UK with
turnover in UK reaching 5.5 million Francs in 1988.

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 The AXA Way: Improving Quality of Services

helped AXA to strengthen its position in Germany, the UK and the Netherlands. In the
same year, AXA got its shares listed on the Paris stock exchange. In 1989, AXA
acquired a controlling equity stake in Compagnie du Midi and became the second
largest player in the French insurance market. By this time, AXA was operating across
the world through 42 subsidiaries. The company had 16,000 employees and 4,000
general agents with turnover of 45 million Francs (Refer Table I for other acquisitions
of AXA group).
Table I
AXA – Acquisitions*
Year Company Country
1991 The Equitable USA
1994 Victoire Belgium
1994 Boréal Assurances Canada
1995 National Mutual Australia
1996 Compagnie UAP France
1999 Guardian Royal Exchange UK
1999 ANYHP Belgium
1999 Nippon Dantai Japan
2000 Sun Life & Provincial Holdings UK
2002 Banque Directe France
2004 Mutual of New York USA
2005 Framlington group UK
2005 Seguro Directo Portugal
Adapted from www.axa.com.
* The list is not exhaustive.
In 1994, AXA established AXA Asset Management, Europe. It was later renamed
AXA Investment Managers (AIM). AIM invested assets in different markets across
the world and developed investment solutions for its customers. In 1996, AXA came
out with an American Depository Receipts8 issue, and got them listed on the New
York Stock Exchange. In 1999, the acquisition of Guardian Royal Exchange9 made
AXA the largest player in Ireland‟s non-life insurance industry. Forming a part of the
acquisition was the German arm of Guardian Royal Exchange, whose acquisition
placed AXA among the top two companies in the German insurance industry. In the
same year, AXA spread its operations to New Zealand, Australia and China. AXA‟s
US business was renamed AXA Financial Inc.

8
American Depository Receipts (ADRs) were first created in 1927 by JP Morgan, to make it
easier for Americans to invest in the British retailer Selfridge. ADRs are certificates, which
represent the stocks of a non-American company, listed on American stock exchanges or
over-the-counter. All the ADR transactions are carried out in US dollars.
9
The UK based Guardian Royal Exchange Plc provided life and non-life insurance services,
other related financial services and investment services. The operations of the company
were spread across the world.

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Enterprise Performance Management

While focusing on acquisitions, AXA constantly evaluated its business portfolio to

divest those companies which did not fit in with its overall business objectives. In
2002, AXA sold its health insurance business in Australia. In the same year, its
businesses in Hungary and Austria were sold. By then, AXA had emerged as the
second largest life/health insurance company in the world and had more than 50
million individual and corporate clients. In 2002, the revenues of AXA were € 74.7
billion and net income was € 949 million.
In 2005, AXA operated in five business segments – Life and Savings, Property &
Casualty, International Insurance, Asset Management and other Financial Services
(Refer Exhibit I for the details of AXA Business Segments).
Exhibit I
AXA – Business Segments
Life & Savings
This product segment offers a wide range of products for individuals and groups. It
includes life, health, savings and retirement related products. The life insurance and
savings products are: term life, whole life, universal life, mortgage endowment,
deferred annuities, immediate annuities, variable life, etc. The products are
distributed through general agents, salaried sales force, bank networks, brokers and
financial advisors.

Property & Casualty

Personal and commercial insurance products are offered in this segment. The
products include automotive, homeowners, household, property, general liability
and permanent health insurance for individuals and small to medium sized
companies.

International Insurance
The business in this segment is conducted through AXA RE and AXA Corporate
Solutions Assurance. AXA RE looks after the reinsurance activities while AXA
Corporate Solutions Assurance caters to large insurance risk activities.

Asset Management
Alliance Capital Management and AXA Investment Managers are the principal
asset management companies of AXA. These companies manage assets on behalf
of the retail investors, individuals and institutional clients. Asset management
specialist teams who look after the activities are present in Western Europe, United
States and Asia Pacific.

Other Financial Services

These services are offered in Belgium and France; through AXA Bank Belgium,
AXA Banque and AXA Crédit in Belgium, and through AXA Banque in France. In
Belgium, the company provides a wide range of financial services to individuals
and small businesses. The services offered in France are cash flow and securities
flow management, bank account services to AXA‟s clients, distribution networks
and direct clients.

Compiled from various sources.

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 The AXA Way: Improving Quality of Services

The Problems

The late 1990s and early 2000s presented many challenges for the global insurance
industry. Major events that affected the global economy were the oil price hikes in
1999 and 2000, and the burst of the speculative bubble in technology stocks. The year
2001 witnessed a global economic slowdown, which resulted in a decline in corporate
earnings.
The insurance industry was among the worst hit and underperformed the general
indices. Lower equity returns, low interest and high default rates – all had a
negative effect on the industry. The September 11, 2001 terrorist attacks 10 in the
US resulted in total insurance claims of over US$ 70 billion.
In the life insurance segment, insurance companies faced pressure on their
investment margins and low fees on universal life insurance 11 products. Most
insurance companies experienced severe losses in the equity markets. In the
property and casualty insurance segment, claims increased to an unprecedented
extent, mainly due to the September 11 attacks, natural catastrophes and claims
related to asbestos 12. At the same time, the price of the reinsurance increased. The
property and casualty insurance companies faced low margins and increased
pressure on profitability and solvency.
AXA started facing problems in many countries where it was operating. In France,
during the second half of the 1990s, the tax laws concerning life insurance underwent
a change; the tax relief on life insurance contracts was reduced. However, the market
started growing again by the late 1990s owing to savings-oriented retirement products
and contracts. In the UK, a new legislation came into force in 2001, which imposed
1% limit on annual charges that could be levied by insurance companies for individual
pension schemes. This created pricing and competitive pressures on the company. The
economic conditions in Japan were weak and there were problems in areas like
banking, brokerage and insurance. So, the consumer confidence in financial products
was adversely affected. The insurance market was reeling under pressure, with several
mid-sized insurance companies going bankrupt.
At this time, there were high growth opportunities coming up in emerging
markets, and AXA was in a position to take advantage of these because of its vast
geographical spread. In May 2000, Bébéar was appointed as the Chairman of
AXA Group Supervisory board and Henri de Castries (Castries) took over as
Bébéar‟s successor, taking over as Chairman of AXA Group Management
Board13.

10
The September 11, 2001 attacks were a series of terrorist attacks in the US. Hijackers, who
took control of four US domestic commercial airliners, crashed two planes into the World
Trade Center in Manhattan, third aircraft into the US Department of Defense headquarters at
the Pentagon and the fourth plane was crashed into a field in Somerset County,
Pennsylvania. Property owners and insurers incurred heavy losses due to damages running
into billions of dollars.
11
Universal life insurance refers to insurance products that provide permanent insurance
coverage and greater flexibility on premium payment.
12
Asbestos, a fibrous material used in construction can cause many diseases. Workers who
developed asbestos related diseases could file law suits against the companies. The company
then filed claim with the insurance company. Though the number of asbestos related claims
reduced by the late 1990s, they emerged in 2000s and for the US insurance industry, total
asbestos related claims were reportedly to the tune of US$ 65 billion by May 2006.
13
AXA followed dual governance structure with clear demarcation between supervisory board
and management board.

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In 2000, AXA initiated a buyout of all its outstanding minority interests in the US and
the UK. These included 43.8% holdings in Sun Life & Provincial Holdings, 26% in
AXA China and AXA Financial. In 2001, AXA‟s financials were under pressure due
to global recession and a bearish phase in the financial markets. In 2001, AXA
reported revenues of €75 billion as compared to €80 billion in 2000. AXA‟s exposure
to the September 11 attacks was €650 million. The assets under management were at
€910 billion in 2001 and €895 billion in 2000. Europe accounted for 60%, North
America for 18% and Asia Pacific for 14% of AXA‟s consolidated revenues.
AXA had achieved much of its growth over two decades through various mergers and
acquisitions. These acquisitions brought several small companies into its fold. As a
result of the mergers, several management issues including cultural and
communication issues, legal compliance, capital allocation, integrating people and
processes, had to be dealt with. AXA operated in many countries across the world and
had to face statutory, regulatory & legal, accounting & tax systems that differed from
country to country.
With operations in several countries, AXA began focusing on its core businesses and
important markets. The company believed that improving operational performance
was critical to success. In early 2001, Castries said, “The series of mergers we have
completed has given us critical mass. The time has now come to focus our energies on
attaining operational excellence.”14 AXA unveiled a blueprint for achieving
operational excellence called - „The AXA Way.‟ This was a continuous process
improvement program that was designed to improve customer service quality and gain
market share.

The AXA Way

AXA had set priorities which included strengthening the group‟s businesses in most
developed and high potential markets like Western Europe, North America and in
selected countries in the Asia Pacific region. Another priority was to achieve
operational excellence in each market by leveraging organic growth and improving
quality and productivity. In 2002, when AXA measured its customer satisfaction15, the
score was 53, with defaults at about 20%, thus presenting great scope for
improvement.
To initiate the AXA Way program, Brunet, former Chairman and CEO of Ford France
Automobiles was brought in as a member of AXA‟s management board in April 2001.
Brunet had implemented a number of quality improvement programs in Ford in
France. According to Brunet, “This industry (insurance) has not been under the same
sort of competitive pressure as manufacturing, but that has been changing. My job is
to push quality up and costs down.”16
The implementation of the AXA Way was carried out in three phases. In Phase I,
started in 2002, the AXA Way was launched, awareness was created and process
improvement was carried out. This phase was implemented successfully. In the
second phase, during 2004 and 2005, AXA concentrated on building competency and
confidence. From 2006 onwards, in the third phase, AXA planned to carry out
continuous improvement.

14
“Interview with the President and CEO,” AXA Activity Report 2001.
15
In order to obtain details of customer needs and expectations, AXA regularly conducted
customer scope surveys. The survey was developed in 1999 and contains a series of
questions pertaining to various business lines and segments. The questionnaires were sent to
a sample of customers. The results of the survey were used to identify and address customer
concerns.
16
Andrew Capon, “AXA Wielder,” Institutional Investor, October 2004.

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The AXA Way gave utmost importance to the views of customers. Employees were
given ownership of the tasks they were responsible for and were expected to
contribute to the improvement of processes17. One of the problems in AXA was to
make employees understand the processes they were working on. Being in a service
industry, most employees were not able to view their day-to-day activities from the
perspective of processes. Though there was initial skepticism about the applicability
of a quality program in a service industry, the employees were quick to adapt to it.
Brunet concentrated on reengineering the way AXA dealt with its customers. He
encouraged the employees to improve the company‟s systems. They were asked to
introduce ways to simplify procedures. According to Brunet, “AXA Way is a fact-
based method, it is customer oriented, and it allows for employee ownership and
empowerment.”18
The AXA Way was based on the „Six Sigma‟ set of tools and techniques for process
improvement. Through this, the company aimed at hearing the „Voice of Customer‟
(VoC) in order to achieve operational excellence by delivering what the customers
expected (Refer Exhibit II for the details of AXA Way).
Exhibit II
The AXA Way

Customer Focused Fact Based Method

Listening to the voice of the customers Data driven approach
(VoC) Key measures identified and
Improving processes performance to systematically tracked
meet customer expectations

Continuous Improvement of the Employee Ownership and

Performance Responsibility
Continuously listening to VoC Empowering employees to act on the
Transfer to tools and methods to performance of their processes
systematically control and act on the
performance
Building a customer and performance
oriented culture
Source: The Benefits of Being Global, AXA.
Initially, AXA chose ten of its companies to implement the AXA Way. These
companies included AXA Australia, AXA Belgium, AXA Financial, AXA France,
AXA Italy, AXA Japan, AXA Germany, AXA Spain, AXA Sun Life and AXA Group
Management Services. The central unit at France defined a common method for
selecting, measuring and monitoring projects. Another major responsibility of the
central unit was to train the AXA Way teams. The operating units developed AXA

17
A process is an activity that converts inputs provided by suppliers into outputs demanded by
customers. Inputs include data and resources needed to execute the process. The process
changes the input into services that are valuable to the customer. The output refers to the
services that result from the process and are used by the customers. The process of
transforming inputs from suppliers into output for customers involved several inter-
departmental activities within the company.
18
“Executives Trade Stories on the Challenges of Doing Business in a Global Economy,”
Strategic Management, Wharton, November 03, 2004.

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Enterprise Performance Management

Way projects with the support of an AXA Way leader. The country CEO acted as the
project sponsor. The projects were flexible enough to accommodate local issues and
local demands. The AXA Way leaders were responsible for the project at the
company level and AXA Black Belts19 provided the support to the managers in
implementing the AXA Way locally.
Beginning in 2002, AXA regularly conducted a seminar called „Ambition AXA,‟ to
sensitize participants to the AXA Way and how it supported AXA‟s vision. „Ambition
AXA‟ was a three day seminar which brought participants from several AXA group
companies together (Refer Exhibit III for Vision and Values of AXA and Exhibit IV
for details of Ambition AXA). By February 2003, the AXA way was implemented in
18 companies, which together accounted for 83% of group revenues. By 2004, more
than 4000 employees were sensitized to the AXA Way and the company had trained
234 Black Belts.
Exhibit III
The AXA Vision
“We have chosen a demanding business. If we do it right, then we enable our
clients to be life confident because they feel reassured, protected and supported as
they undertake important projects at various stages in their lives. Our vision of the
business is what guides our daily work. It reflects the social and human aspects of
Financial Protection, whose value to people has never been greater” by Henri de
Castries, Chairman of the AXA Management Board.
AXA VALUES
Team spirit
Integrity
Innovation
Pragmatism
Professionalism.
Source: www.axa.com.
Fact Based Method
The AXA Way was initiated by improving existing processes on a case-by-case basis.
This was done to demonstrate the effectiveness of the AXA Way with a limited initial
investment. At the same time, AXA developed process focus, in which the employees
were made aware of their activities and their contribution to the organization. The
process focus took into consideration the requirements of the customer and measured
the actual performance against the requirements. Through the process focus, the
changes that were required to bring the employees‟ performance in line with customer
demands were explained. The key processes for each of the tasks were examined
carefully and the customers‟ expectations in regard to these tasks were identified.

19
Simlar to Six Sigma black belts. When employees undergo a short course in Six Sigma, they
are awarded green belts. Black belts are project managers who have the responsibility of
teaching the technique and advising the management. Master Black belts are responsible for
integrating Six Sigma into the firm‟s strategic plans.

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 The AXA Way: Improving Quality of Services

Exhibit IV
Objectives of Ambition AXA

Share AXA’s Ambition

Participants must understand and buy in to the Group‟s strategy in order to fully
understand their own role in its implementation.
Buy in to the Means for Success
Balancing the needs of clients, shareholders and requires the adoption of AXA
Way, a common method for making ongoing improvements and keeping our
promises to partners.
Act to Reach the Ambition.
After completing the seminar, participants draw up an individual action plan and
decide precisely how and where they will contribute to the Group‟s success.
Step into AXA’s Global World
The diverse origins of AXA employees and seminar participants provide a unique
opportunity for sharing experiences.
Source: www.universityweb.axa.com.
One of the key areas for improvement identified by AXA was commission
payments. To improve this service, AXA got feedback from customers and
intermediaries about the service and applied DMAIC 20 principles (Refer Exhibit V
for details of DMAIC). In the Define stage, complaints from intermediaries who
had not received the commission or whose commission payment was delayed
were noted. Some intermediaries also complained that the commission was not
paid at the agreed rate. The whole process, right from setting the commission to
payment, required improvement.
Exhibit V
The DMAIC Principles

Define: In the first stage, the overall scope of improvement is defined, and the
details of the goals are set. The existing situation is assessed. The processes are
mapped and Critical to Quality (CTQ) items are identified. This stage involves:
Identifying customers, defining their service or product requirements and their
expectations.
Defining the limits within which the project is to be pursued along with
beginning and ending of the process.
Process flow is mapped and processes that need improvement are defined.
Measure: In this stage, data on the performance of the process is obtained. The
current performance and its Six Sigma metrics are decided. This stage involves:
Developing a data collection plan.
Collection of data from different sources in order to define the types of defects.
Comparison of collected data with the results obtained from a customer survey
to establish the shortfall.

20
DMAIC refers to a data-driven quality strategy for improving processes. It is an acronym
for five interconnected phases – Define, Measure, Analyze, Improve and Control.

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Enterprise Performance Management

Analyze: In the analysis stage, the teams set out to understand the issues in detail.
The areas that need improvement are identified and the causes of defects are
determined. Methods like hypothesis testing and capability analysis are used. This
stage involves:
Determining the gap between the present performance and ideal performance.
Identifying the causes of variation.
Prioritizing the opportunities to improve.

Improve: Under this stage, solutions are identified and tested. Once the solutions
are deployed, the actual improvement is measured. The actual benefits gained are
evaluated through cost benefit analysis. This stage involves:
Creation of innovative solutions.
Development and deployment of the implementation plan.

Control: In the final stage, all the process documents are updated. It involves:
Placing of control mechanisms in order to maintain the current status and to
prevent the mistakes that have already occurred.
Development, documentation and implementation of the ongoing monitoring
plan.
Institutionalizing the improvements that have occurred.

Compiled from GE’s DMAIC Approach and other sources.

In the Measure stage, an audit of a sample of payments was carried out. This showed
that there were inaccurate payments. There were several instances where the
commission was not paid because there was no commission agreement between the
intermediary and the company.
In the Analyze stage, instances of incorrect payments and the causes of these mistakes
were established. The main reason for inaccurate payments was that the rates used
were incorrect, because a complicated procedure was followed to calculate these rates.
A new procedure to calculate commissions was established.
In the Improve stage, procedural improvements were undertaken in order to ensure
that the process was accurate. To eliminate the occurrence of errors, correct
commission rates were incorporated. In order to maintain accuracy in the Control
phase, a query system which checked that nil commissions, was incorporated. (Refer
Exhibit VI to determine how voice of the customer was used to improve process
performance).
The process improvement considered all the points at which customers interacted with
the business and looked at how each activity contributed to the overall output. In
carrying out the quality improvement exercise, AXA ensured that each and every
process in the business contributed to the value chain i.e. each process had at least one
customer. The output of the process had to be in line with the requirements of the
customers. Every process had critical requirements that could be split between quality,
process and compliance (Refer Table II for critical requirements in collecting the
premiums in AXA).

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 The AXA Way: Improving Quality of Services

Exhibit VI

Voice of Customer in Intermediaries

Service Customer Need Customer Target
VoC
Quality Issue Statement and Tolerance
You have paid me Accuracy Payment at the Commission
the wrong amount rate agreed first payment within
time 10% of amount
calculated from
rate agreed

You have paid the Accuracy Payment to Commission

wrong agent correct agent payment for each
first time case always to the
correct agent

I don‟t understand Clarity Statements Enquiries about

the commission which are easy statements less
statement to use than one per
quarter for each
agent

VoC: Voice of Customer, as documented

Service Quality Issue: The service issue that the comment relates to – i.e cycle
time, cost, accuracy, credibility etc.
Customer Need Statement: Customer need as per the VoC
Customer Target and Tolerance: Describe what the customer really wants in
measurable terms with target and tolerance limits.

Source: Richard Davis, “A Process Focused Approach to Improving Business

Performance,” www.uwe.ac.uk.
Table II
Critical Requirements in Collecting Premiums in AXA
Critical to
Critical to Quality Critical to Process
Compliance
Prompt notification of failure of Sufficient skilled staff Regulatory
payment Complete information requirements
Accurate amendment of change Accurate MIS
Change implemented before
next due date
Correct amount at the correct
time
Easily contactable
Reliable collection methods
Source: Richard Davis, “A Process Focused Approach to Improving Business
Performance,” www.uwe.ac.uk.

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Enterprise Performance Management

Customer Focus
AXA had been collecting customer feedback in an annual „Customer Scope‟ survey
since 1999. In this survey, AXA sent questionnaires to a sample of customers. The
results obtained from the survey were used to address the concerns of customers.
AXA identified customer satisfaction as one of its key performance indicators (Refer
Exhibit VII for KPIs of AXA).
Exhibit VII
Key Performance Indicators

Customers
Market share
Net cash flows
Client satisfaction

Employees
Scope results employees
Scope results agents

Shareholders
Combined ratio
Present value of future profits in life
Life and savings cost / income ratio

Stakeholders
Implementation of AXA Way
Adapted from www.axa.com.
In 2003, under the AXA Way program, 19 AXA companies located in 12 countries
used the findings from the Customer Scope survey to improve their services and also
for introducing new products across the world. AXA improved its customer facing
services at all its call centers. Before the AXA Way was implemented, the
productivity in the call center was measured using conventional methods like time
taken to answer the call and the number of calls handled. Calls from customers were
thus considered in isolation without any importance being given to the overall
customer experience.
When DMAIC principles were applied in the call centers, it was found that 15% of the
calls were from customers who were not satisfied with the service during their first
contact with the call center. It was also found that there was no system in place to
recognize repeated calls. The performance of the personnel at the contact center was
assessed depending on the duration of the call rather than the outcome.
The AXA Way provided a structured approach and guiding principles to improve
services across its call centers. Qualitative call assessment to measure successful call
resolution was put in place. The calls were monitored regularly and compared to
service quality criteria based on customer satisfaction feedback. The employees
monitoring the calls used two separate evaluation forms – one for evaluating the
quality of call, and the other for measuring the accuracy of data input. The managers
and supervisors were given targets for improvement of quality.

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 The AXA Way: Improving Quality of Services

Continuous Improvement
Under the AXA Way program, AXA focused on continuous improvement by taking
regular customer feedback and incorporating it into its products and services across
the organization. For instance, in AXA Ireland, employees were encouraged to share
knowledge and suggest ways of improving the existing processes. AXA Ireland
developed an „innovation quadrant‟ which consisted of four elements – creating
customer focused opportunities, improve existing products, services and processes,
eliminating non value adding services, and reusing AXA global success stories (Refer
Exhibit VIII for the AXA Way success stories).
Exhibit VIII
The AXA Way – Success Stories

In Germany, the conversion rate on quotations requested by customers and

insurance policy renewal was very low. It was found that customers expected to be
given the quotations within three days of their requests. AXA redesigned the
process of issuing quotations and started issuing the quotations the same day as the
receipt of the request. The process of issuing quotations was simplified, which
helped the company reduce its response time. Thus, AXA was able to retain many
more customers. After the redesign of the process, 100% of the quotations were
sent within three days of receiving a request in 2003, as against 36% in 2002.
In Germany, AXA was offering health insurance services and competition was
increasing in this area. AXA decided to improve its service and implemented
process management techniques to process the application the same day as it was
received. AXA was able to start the processing of applications received by fax on
the same day. Same day processing became a key differentiator for AXA –
something that customers really appreciated. By August 2005, AXA was able to
achieve compliance of 97.7% for same day processing. This also led to increase in
sales, with the number of applications increasing from 784 a month in January
2005 to 1433 a month by August 2005.
In Italy, underwriting assistance was available to the agents only 40% of the time
while customers‟ expectation of assistance was much higher. AXA implemented a
web based tool for issuing requests, after which the requests were monitored and
prioritized. After the implementation of the tool, the availability of assistance
increased by 99% without deploying any additional resources.
AXA found that its new policy sales were high in Belgium and Germany. The
main reason was that the products provided Guaranteed Minimum Income Benefits
(GMIB) and Guaranteed Minimum Death Benefits (GMDB). Realizing the
potential of these products, AXA soon started selling these products in the US and
Japan and planned to expand it further.
Compiled from various sources.
In order to encourage staff to come up with innovative ideas, AXA Ireland started
what it called a „Mad House‟ program. In this program, a team of seven employees
from different functions and different hierarchies was formed. The team worked
together for a period of two months. They had to brainstorm and develop two
customer-focused innovative proposals. All the participants were encouraged to come
out with ideas, which were assessed and critically evaluated. The final output was
presented using a business case framework to the top management of the company. If
their proposals were selected for implementation, the members of the „Mad House‟
program were included in the implementation process. The program benefited both
the company and the employees. The success of the program can be gauged by the

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fact that in a span of one year, more than 200 ideas were presented, of which 20 were
selected for implementation.
In other countries, the „VoC‟ was used by AXA to introduce several new products.
The products introduced in France included „Odyssiel‟, a unit linked product. The
product was designed to meet the individual‟s needs and could be passed on as
inheritance. In the UK, a new product was launched, which combined health with
property and casualty insurance. The new products in Japan included savings
products, medical insurance and term life insurance. In the US, life insurance with
spouse protection and guaranteed minimum withdrawal benefit was introduced. In
Southern Europe, segmented products which provided the benefit of a single or
regular premium and investment protection, were launched.
In Germany, AXA introduced MultiHelp, comprising of five different insurance
products that met the demands of specific customers. A motor insurance product
called DrivingHelp, provided insurance coverage to drivers. TravelHelp was a product
introduced to reimburse loss caused due to flight delays. HomeHelp offered home
surveillance and security services. In Italy, where the cost of car insurance was high,
AXA introduced insurance services according to the mileage estimate.
Employee Ownership
Being in a service industry, AXA considered its employees as its most valuable asset
and believed in keeping them motivated. All employees were required to play a major
role in achieving high standards of quality in the company‟s products and services.
AXA kept its employees informed about the strategies and objectives of the group.
The role they were expected to play in realizing the ambitions of AXA was
communicated through managers. All managers in AXA were encouraged to give
more responsibilities to their subordinates.
From 1993 onwards, AXA had been conducting Scope surveys for its employees to
measure employee satisfaction. In the survey, the employees were asked to assess AXA
as an employer. The survey, administered all across the company, contained 72
questions under three sections. The first section evaluated how employees rated AXA,
its management, team effectiveness and the work environment. The second section had
questions about the individual job including the content of the job, resources available to
do the job and the tools required to do the job. The third section contained questions
about the individual employee relating to career opportunities and development.
In 2005, more than 80% of the employees participated in this survey. The results of
the survey were consolidated at the department level, at the company level and at the
group level. The results were analyzed in order to obtain detailed feedback and to
address employee concerns. The Scope survey score increased from 36 in 2003 to 47
in 2005. Any score below 25 indicated that the employees were not satisfied, while
scores above 40 showed that the employees were happy in their job and also with the
organization.

Reaping the Benefits

By the first half of the year 2005, AXA had more than 400 Black Belts and 10,000
employees had been sensitized to the AXA Way. By then, the AXA Way had been
launched in 23 of its companies which accounted for 90% of the group‟s revenues.
The implementation of the AXA Way helped in improving customer satisfaction at
AXA. This was revealed through the Scope survey on customers conducted in 16
countries, which accounted for 94% of group‟s revenues. Customer satisfaction on
servicing had increased to 69% during the first half of 2005 as compared to 64% in
the corresponding half of the year 2004. The customer satisfaction on selling grew
from 71% in the first half of 2004 to 79% in the first half of 2005.

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Another positive aspect of implementing the AXA Way was customer retention. In
Japan, in 2002, the surrender rate was 10.6%, but this was reduced to 6.6% by 2004.
The reinvestment rate for maturities that stood at 48% in Portugal in 2004, increased
to 57% by the first half of 2005. During the same period, the reinvestment rate in Italy
improved from 27% to 44%, and from 23% to 42% in Spain.
During the first phase of implementation of the program, the annual benefits that were
obtained through the AXA Way were at €38 million. The benefits included technical
gains, productivity gains, reduction in general expenses and incremental revenues. By
the first half of the 2005, cumulative benefits amounted to €200 million, of which,
63% were benefits that were achieved through cost reduction, while 37% was due to
incremental revenues (Refer Table III for benefits achieved through the
implementation of AXA Way). With the success of the AXA Way, Castries launched
Ambition 2012 that set the group the objective to become the most preferred company
in its industry by 2012.
Table III
AXA Way – Annual Benefits
(In € million)
Year Benefit
2003 38
2004 85
2005 150*
2006 200 *
2007 230 *
Adapted from www.axa.com.
* Estimated benefits.

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Additional Readings & References:

1. Shawn Tully, Watch Out! Here Comes Crocodile Claude, Fortune, December 20,
1999.
2. Jim Biolos, Six Sigma: It’s not Just for Manufacturing, HBS Working Knowledge,
January 27, 2003.
3. AXA Group Signs $1 Billion Tech Services Deal with IBM, www.finextra.com,
February, 28, 2003.
4. Anthony O'Donnell, I&T Executive Summit News: Elite CIOs Weigh-in on
Industry Issues, Insurance & Technology, November 19, 2003.
5. Black Belt Power, UK Excellence, February / March 2004.
6. AXA Financial Presentation to French Media, September 22, 2004.
7. Denis Duverne, A Simple Company in a Complex Industry, Merrill Lynch, October
2004.
8. Executives Trade Stories on the Challenges of Doing Business in a Global
Economy, Strategic Management, Wharton, November 03, 2004.
9. Eric Monnoyer, Stefan Spang, Manufacturing lessons for service industries: An
interview with AXA's Claude Brunet, McKinsey on IT, May 2005.
10. Denis Duverne, AXA: Opportunities in the World’s Largest Market, Goldman
Sachs Conference, June 08, 2005.
11. Elizabeth Kazi, Six Sigma: Need to Know, AFR Boss, July 2005.
12. Henri de Castries, Claude Brunet, Denis Duverne, The Benefits of Being Global,
AXA, October 27, 2005.
13. French aristocrat wants a revolution, www.telegraph.co.uk, April 24, 2006.
14. Nothing Is Ever Done, Finished, Or Over In Any Market, Henri de Castries,
Chairman and CEO/AXA, Business Today, May 07, 2006.
15. www.axa.com.
16. www.qualitydigest.com.
17. www.isixsigma.com.

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