(Image by Michael Gaida.)
In late 2018 Gary Kaplan had never heard the term “ecosystem” in connection with insurance until he was invited by AXA XL’s (Stamford, Conn.) innovation team head Doug Alexander to join a project focused on the concept. That project became AXA XL’s North America Construction business’s Construction Ecosystem, an integrated digital platform designed to encourage the insurer’s clients to adopt technology and share data and insights in the interest of better managing risk on job sites and across their organizations. The initiative, which went live in March 2020, earned AXA XL Celent’s Model Insurer Award, and Kaplan, President, Construction, AXA XL, spoke about it with his colleague Rose Hall, Head of Construction Innovation, during Celent’s (Boston) Innovation Insight Week (March 9-11), in a session hosted by Donald Light, a Director in the Analyst’s North America Property/Casualty practice.
AXA XL’s Construction Ecosystem is a digital platform that serves as a hub, giving the insurer’s construction company customers access to information and partners drive technology adoption that will result in improved risk management and profitability. The Ecosystem identifies eight technology categories where customers can find innovative solutions in support of those goals: enterprise software, field management, fleet telematics & equipment management, worker wearables, imagery & extended reality, alternative production, IoT sensors, and analytics. It also provides access to eight types of information to support safe and successful operations: claims, data, weather, safety, cost, auto liability, supply chain, schedule and quality.
In its report on the initiative, Celent describes the Construction Ecosystem as having the capability to provide customers a wide range of capabilities such as:
- Curated valuable technology solutions with preferred pricing and / or terms
- Industry benchmarking
- Auto and casualty claims comparisons
- Forecasted weather risks and historical weather data
- Project specific analytics
- Integrated data from third‐party firms
- Access to a network of knowledge‐sharing and trusted partnerships that drive innovation across the construction industry
- Opportunity to manage risk via new innovative insurance products leveraging the ecosystem
At the time Alexander approached Kaplan, AXA XL’s Construction business was receiving overtures from insurance and construction technology (ConTech) companies through its risk engineers seeking to explain how new digital technologies were helping to serve risk management issues. Seeing an opportunity, AXA XL created a team of experts from a variety of disciplines, including construction insurance, risk management, Internet of Things (IoT) and data analytics to hold a workshop.
“The purpose was to envision how the construction businesses could approach these new technologies in a way that would not only strengthen our reputation in the marketplace but deliver value to our clients,” Kaplan explained.
Subsequently, AXA XL held a work session where in the project team identified its customers’ four major problem areas as a basis for designing a means for fostering adoption of technology and sharing of data—schedule, budget, quality and safety. Kaplan then set a goal for the team to establish a vision.
“I said, ‘By 2025, could our ecosystem for the risk management departments of our construction companies make us the glue for the entire capital projects lifecycle by lowering loss ratios by 15 percent over 5 years?’,” Kaplan recalled. “I set that out there is kind of the end goal, and the team was off and running.”
Kaplan identified five long-term initiatives for the ecosystem focused on driving technology adoption on the part of AXA XL’s construction company customers. Driving technology adoption was the central goal not merely because of the opportunities AXA XL’s risk engineers were learning about, but also because the construction industry was notoriously technology laggard. “If you ever look at the adoption of technology by industry group, construction sits at the very bottom—it’s probably the worst industry out there so far as far as new technology,” Kaplan observed. He identified the initiatives as follows:
- Developing the construction ecosystem itself;
- Identifying ConTech vendors—vetting and picking the right partners;
- Benchmarking contractors;
- Evaluating the potential for developing new products and technology; and
- Using IoT to give risk engineers constant feedback on the status of their projects.
AXA XL then created a Customer Council to work with to execute pilots. “It was pretty easy for us to identify who was leading adoption in the industry through those sessions we were holding with them,” Kaplan said. “So, we narrowed it down to a group of six customers that we would partner with as we piloted some of these solutions—the five initiatives that we were building. We would use them is kind of a sounding board, as a way of getting that feedback loop to us whether we were going in the right or wrong direction.”
AXA XL shared results of pilots with a larger group and began to receive interest in the creation of a broader customer user group open to its customer base—which includes roughly 4,000 clients.
AXA XL’s Hall noted that construction companies are overwhelmed by available technologies, and that the Construction Ecosystem helps them to more methodically evaluate their opportunities. One of the most important features of the Ecosystem in that regard is the Technology Adoption Maturity Index (TAMI), she explained.
“Certain customers will be more interested in point solution technologies—like the technologies they’re using on the particular job sites to solve problems on the job sites,” Hall said. “Other contractors will be looking at being breakthrough innovators, so they’ll be on the cutting edge doing more experimentation. So, as we go through this list right some of them want to know where they stand compared to their peers; some of them want to know how they’re going to solve their new risk management problems with insurance.”
Technology Adoption Maturity Index
As customer consider the eight technologies categories in the Ecosystem, the TAMI provides guidance as to what competitors are using. AXA XL creates personas for customers to identify their competitive niche. “We sit with them we talk about what they’re using for what, and as we’re scoring them, we compare them to like contractors,” Hall explained.
“And so different customer personas will have different recommendations in the TAMI,” Hall continued. “That gives them a place to start it gives a way to narrow down this whole field into, ‘OK this year I’m going to look into wearables, water mitigation and telematics.’ And then they can create a road map for themselves.”
With the TAMI acting as a framework for having conversations about technology adoption, AXA XL continues to expand its library of technologies and partners, working with customers to undertake strategic projects to get them to the next level, according to Hall. “It’s kind of a concierge service rather than an app marketplace right now,” she said.
Hall identified a broader goal of connecting people and disseminating knowledge through a community of trusted advisors. AXA XL’s constructions customers are looking for leadership, she noted. “The most sophisticated ones have chief innovation officers or chief technology officers, but everybody else is still in the learning phase,” she said. “Because we sit in the middle of that and we see all the cross section and we are there, we share the risk with them in in a very tangible business way. We feel we’re in the best position to help make those connections and form those relationships and help share out all of that knowledge.”
To Stay Competitive, Embrace the Data Science Team of the Future