It’s been a year now since the Paris-based insurer AXA, a global power, picked up XL Group in a $14.9 billion deal.

The move made AXA the largest commercial P&C insurer in the world — bigger than Allianz, bigger than Chubb, bigger than what used to be the biggest, AIG.

There’s a saying in insurance that probably applies to some other disciplines. There is the U.S. view of the world, and then there is the global view of the world.

That saying touches on one of the chief challenges facing Joe Tocco, one of the Risk & Insurance®’s Insurance Executives to Watch in 2020.

As chief executive, North America, for AXA XL, Tocco is charged with changing and growing the awareness of AXA in North America and principally the U.S., the most desired market in the world.

His task will not be an easy one.

The whole world, including the sharpest and most aggressive insurance markets, Lloyds’ included, wants to do business here, and no one is going to hold the door open for you, much less offer you a slice of premium pie.

R&I caught up with Tocco in mid-November to get his views on the task ahead of him, his hopes for 2020, and his perspective on more general market conditions.

XL’s been through its share of transition. There was the $4.28 billion merger of XL and Catlin in 2015. Then the AXA-XL Group deal three years later. Personnel, client relationships and tech platforms all need to be adjusted for the business to move forward smoothly and profitably.

“We just had our one-year anniversary as being a part of AXA,” Tocco said.

“So as we get into 2020, we’re really hitting the mainstream with them. The honeymoon time is over. Now it’s time for us to really take advantage of what AXA brings to the table for us; how we can better align ourselves with AXA, and maybe some products and services that they can bring to the table that would help round out our product offerings as well,” he said.

“Outside of the U.S., they are the best-known brand in the industry, but generally not a known entity here in the U.S.

“My expectation is that in the next couple of years that will certainly change, particularly if we start to dip our toes into some different businesses than we’ve historically done. Whether or not that will happen remains to be seen,” he said.

Helping matters is that AXA has a robust client list. Tocco said Thomas Buberl, CEO of AXA, can take a spin through his contacts list and unearth the names of many Fortune 500 and Fortune 1000 CEOs.

“That had been in the back of my mind, how we could better leverage that, how we can really raise the level of engagement there,” Tocco said.

The Rate Discussion

One can’t step too far into the topic of commercial insurance and not mention pricing.  After years of soft market conditions, we are in a transitioning market. Pricing is jumping in property and other lines, because it needs to. Insurers are pulling out of some lines.

“What’s first and foremost are the market conditions; rate,” Tocco said. “We’ve got a lot of momentum going into 2020 in that area.

“But we’re not there yet,” he added.

“But we need this market to continue. It needs to be sensible, whether it’s a property rate or rate in general. I think the key to this is how do you get out in front of it? How do you message it to your clients in a way that they can at least appreciate and understand the need for rate? They may not like the answer, ultimately.

“Certainly, for us here at AXA XL, my expectation is that we treat each client as an individual client. There’s no broad-brush approach to anything that we do. We also have to figure out a way to have a meaningful conversation and explain to them what we’re trying to achieve and how we’re going to do that over the coming years.”

To be clear here, Tocco is far from convinced that the insurance industry is doing a good job of communicating around this transitioning market.

“That’s a real challenge. I’ve had brokers, not as many in the last six months, but if I go back a year, a lot of senior brokers were coming to us saying, ‘Well, our clients haven’t been properly prepared. They haven’t been notified. They don’t understand,’ I say, ‘Shame on you,’ ” Tocco said.

“I’ve always loved trying to solve problems, whether it was a math problem when I was in school, or whatever it was, problems always seemed to launch me into something else.” — Joe Tocco, chief executive, North America, AXA XL

He thinks those communication shortcomings are extant on the underwriting side as well.

“There is definitely a lack of skill set in both the broker side of the house and on the underwriting side of the house on how to navigate. I still won’t use the term ‘hard market.’ I don’t think we’re actually in a hard market. There may be one or two businesses that may technically be in a hard market, but generally, I think it’s a transitioning market,” Tocco said.

Tocco is confident his company excels at client relationships and that his team will navigate these choppy waters of rate increases and some market dislocation.

However, adding to the complexity facing Tocco and other insurance leaders are monstrous losses in casualty.

Social inflation and litigation funding from private equity are producing out-sized jury awards. Penalties for perceived corporate malfeasance are running to the tens of million, the hundreds of millions and even billions of dollars. Markets are pulling out of casualty coverage and premium prices are shooting upward as a result.

“It’s really something, as an industry, that we better get our heads around, because they’re coming after us. They are coming after the deep pockets and they are coming at us as an industry,” Tocco said. “Those are real problems. Six months ago we were talking about it but it is really getting our attention as the year winds down here,” he added.

Tocco and Insurance: A Good Fit

Tocco’s been in the insurance business for more than 30 years and now occupies a pretty lofty position.

In conversation, though, he is consistently very down to earth. He never turns the subject toward himself but rather talks about what his organization, his team, might face or need to accomplish.

But when drawn out, he does express why he and insurance are such a good fit.

“I’ve always loved trying to solve problems, whether it was a math problem when I was in school, or whatever it was, problems always seemed to launch me into something else. Being able to solve a problem was so personally rewarding, particularly if you solved that problem for someone else and made things better for them.

“In this industry, as a consumer, you’re always assuming risks and challenging risks and trying to find solutions that help mitigate some of those risks. I think of my early days as a risk engineer and even doing some of that then. Couple that with the fact that I’ve always loved building personal relationships.”

“In terms of leadership, that was something I never set out to do.  I never set out to be in the position that I’m in.  I never even contemplated it that way. That wasn’t my master plan. I just wanted to do more. I always wanted to get to the next step, but I never really thought about where that would take me. I just kind of went after it day in and day out,” he said.

“I’ve always loved the team concept and being part of a team and being part of a winning team. I’m just a tad bit competitive,” he said.

“I always want to win, and I like to have a team around me that has that same sort of fire and passion to win.” &

For the full list of Insurance Executives to Watch in 2020, click here.