AXA XL Insurance — Q&A with Vice President & Head of Construction Innovation
We often underappreciate the wide variety of stakeholders in a construction project. Although not physically present on site, the insurer is one of those stakeholders and shares risk at every stage of the project. AXA XL is a $15 billion business within AXA Group — one of the world’s largest insurers — who provides a fully integrated vertical in construction, with policies ranging from general liability, workers’ compensation, subcontractor default, and builder’s risk, among others.
Rose Hall co-founded AXA XL’s Construction Ecosystem, bringing together partnerships in the built environment and driving technology adoption for large commercial construction companies. We talk here about AXA XL’s construction innovation network called Innovator’s Circle, the role of the insurer in the construction project lifecycle, and how tech adoption relates to risk management.
Do you mind talking a bit about what AXA XL provides in construction?
Inside the North America Construction Group, we have five lines of business with nine insurance products. It’s basically soup to nuts, most everything a construction project needs.
XL Catlin was acquired by AXA Group in 2018, which includes the North America Construction business as a full vertical. What that means is that in a lot of other insurance companies, they organize themselves by line of insurance business. They’ll have one line of insurance coverage like general liability (GL) and then have specific coverages like workers’ compensation, commercial auto, aligned under GL coverage. There is no industry focus. These same underwriting teams would provide insurance coverage to a wide variety of industries from retail to mining, from construction to manufacturing. That works well for the insurers organization but can result in a disconnected customer experience.
President of AXA XL’s NA Construction team, Gary Kaplan conceptualized a better customer experience where one construction team offers all the lines of business in a strong, interconnected, and partnership-oriented relationship with the customer.
That’s a great example of innovating the customer experience because that’s just how the industry naturally thinks.
I’ve been with AXA XL for seven years. When I first came on, they were like, “Oh, so we’re the only industry vertical insurer.” And I thought, “What does that even mean?” And then they explained it to me, and I was like, “Doesn’t everybody work like that?!”
Well, it just makes good sense for the customer to have everything in one place. When a large contractor customer buys construction insurance from us, they’ll have a specific underwriter for each line of business, all of whom are talking with each other, and if they ever have a concern, they have a centralized relationship with our team.
Your group is also really unique in that you’re taking a very holistic approach to project delivery and recognizing that there are a lot of technologies that can impact the project in really beneficial ways. Are you looking at technology adoption strictly from a risk management perspective? Or are you leaning on technology as an indication of whether or not construction companies have their internal processes in order?
I love the way you’re thinking about it, Nate. So I’m going to say both — allow me to explain.
Risk management can be innovation — and innovation can be a way to manage risk. The reason we put all of this together is because we know that technology is going to make contractors less risky and more profitable, which eventually makes AXA XL less risky and more profitable in the end.
Many times, the construction industry underappreciates the insurer’s role in the building lifecycle. We tend to think of the key stakeholders as the owners, architects, engineers, designers, and the contractors and the subcontractors during the build, and then back to the owner once the asset is operational. But just because the insurer is not on the job site doesn’t mean they’re not part of that stakeholder value chain.
In fact, as an insurer, AXA XL enjoys a rather privileged position in the industry in that we are present across the entire construction lifecycle value chain, and we see a cross-section of the industry’s top contractors that they don’t have the ability to see themselves. In this way, we have a unique ability to influence an industry from a broad perspective — which is quite a powerful opportunity.
If we look at the evolution of risk management from 20 years ago to now, there are many parallels with technology adoption. In the beginning stages, contractors are trying to figure out how to adopt and apply something new, but they struggle with many common barriers to new things, e.g. Why change? Why now? What’s the ROI and when? Why do I need dedicated staff and budget? Where am I going to get dedicated staff and budget? Etc. We saw this with risk management in its infancy, but eventually it caught on — and now most large contractors have a dedicated Risk Manager and/or team to support this important effort. It’s obvious how important the effort is to successful business results, and few challenge this new paradigm today. I believe the evolution of technology adoption will have a similar trajectory.
Tech adoption is an industry problem. Building contractors are struggling to adopt technology in a meaningful way. They want to know what their peers are doing. They want to know it’s supported by their insurer. And so we’re helping in that effort, knowing that somewhere down the line, it’s going to benefit us all.
At AXA XL, we’re supporting this next evolution of risk management called “innovation” but providing services, insurance solutions, and knowledge networks that help the industry bind together and get there faster. Together without customers, we can increase safety and productivity, boost mutual profitability, and enhance our business results.
From my perspective, one of the biggest challenges isn’t the technology necessarily, it’s how contractors approach tech discovery — or to borrow your phrase, figuring out how to use tech in a “meaningful way”.
Yes, a big challenge is the overwhelming amount of technology that’s coming at them. The really big, sophisticated contractors have whole departments that are vetting these things. They have their own tech databases and other tools. But the contractors who are just getting started, they’re grateful that someone has done the culling already.
We’re giving them that starting place. Sometimes it’s knowing where to start. What is the thing that’s going to help us the most? What’s the low hanging fruit? What are our competitors doing?
I can relate to that. Many of the conversations I’ve had with building contractors is that high degree of disorientation and a need to figure out where to start. Can you talk a bit more about TAMI?
We started the Technology Assessment Maturity Index (TAMI) in 2020 and have done dozens of them now. It’s an assessment that evaluates a contractor’s level of tech adoption maturity against peers across 30 different categories. It compares them to an overall industry index which we developed in-house, and to a hand-selected group of their peers in a blinded setting.
The process starts with a 90-minute conversation, after which we send them the report and schedule a 30-minute debrief to discuss and answer questions. The process is personal, and the report is customized to each contractors’ business. We encourage contractors to refresh their TAMI assessment each year in order to keep up with the industry index and their peers as both grow in maturity during this current construction tech revolution. The TAMI is a white glove concierge service which has been very well received. In fact, our booking lead time is typically about 3 months due to high demand.
And how’s the reception when getting that feedback?
Interestingly enough, our customers’ feedback has been overwhelmingly positive, regardless of their final score! The high scorers are of course grateful to have the validation that they are on the right path, but the low scorers are enthusiastic about their reports as it often helps support an internal discussion about additional investment in technology.
I recall the first low scoring TAMI I delivered — I was thinking the customer was just going to be so disappointed and even potentially defensive about their tech maturity and our TAMI service. To my surprise, the innovation leader said, “This is great! I’ve been trying to communicate to senior leadership that we’re underfunding innovation and tech, and that we’re falling behind the industry. The TAMI report provided the third-party validation I needed to help legitimize my position with our C-suite in a quantifiable way that I believe will help us gain additional support, funding, and resources.”
We talk a lot about the human element in construction. As you know, a big part of my work is helping building contractors bridge the office-to-field divide, which can be both cultural and geographic in effect, but that’s crucially important for construction innovation efforts.
Definitely, I think that adds a part two to your question. In response to the human element, we put together an Innovator’s Circle as a peer group with about 60 people in it and made up of innovation leaders from some of the top contractors.
It’s a roundtable, workshopping, peer group for construction innovation and technology leaders. Last year, we held many ideation sessions around the common problems we want to solve as an industry. Many of the problems they wanted to solve were human-related. How do we get stakeholder buy in from our owners and subs? How do we get budget from our CEOs? How do we organize our innovation teams? The tech can be brilliant, but if the people aren’t bought in and the change management isn’t done well, then it’s useless. We’ve set up two projects to tackle this year and we’ll be sharing the output with the industry once completed. The first is “Best Practices for Technology Adoption”, and the second is “How to build and fund an innovation team”. These topics were suggested by the group, and then upvoted to prioritize them for 2022. We’re excited to see what insights come from this high-performing group of thinkers, in this very human approach to innovation and technology.
Nate Fuller is Managing Director of Placer Construction Solutions, advising leadership teams to transform their organizations in ways that improve performance and agility at the field level.
He provides construction companies with a field assessment that delivers transformative information about their field operations and is proven to accelerate innovation & technology adoption for Top ENR contractors.
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