An Ecosystem Evolution
A Q&A with Rose Hall, AXA XL’s Head of Innovation for the Americas
12/2022, Originally published on AXA XL
AXA XL’s North America Construction insurance business launched its Construction Ecosystem in 2020, just a few months into the global pandemic. The intent was to provide its contractor clients with curated technology solutions, concierge services, unique insurance solutions, benchmarks, and knowledge networks designed to help contractors adopt risk-reducing technologies to boost their risk management efforts across their jobsites and across their organizations. Like most ecosystems, the Construction Ecosystem has evolved. The suite of Preferred Tech Partners has grown. New insurance solutions are gaining traction. Benchmarking has proven influential. Two Knowledge Networks are providing peer-to-peer tech adoption guidance and industry leadership.
Fast Fast Forward caught up with Rose Hall, one of the Ecosystem’s co-founders and formerly Head of Construction Innovation at AXA XL, and now, Head of Innovation for its Americas business unit, to talk about the Construction Ecosystem evolution and what’s next. Here’s what she had to say.
FFF: How has the Construction Ecosystem evolved over the last two years?
Hall: It has evolved based on our client feedback. Originally, we thought a big part of the Ecosystem would be to collect and share data. What we learned is that the data integrity across the construction industry just wasn't there yet, nor were contractors comfortable enough with their own data to share it with their insurer, yet. So, we pivoted the Ecosystem from a data strategy to a support services strategy.
Since launching, the construction ecosystem focused on developing tech-adoption services. That was one area that was of real interest to our clients. We now have a suite of technologies compiled in our Preferred Partners suite. We've screened more than 650 technologies across more than 50 use cases and boiled it down to about 180 that we interviewed in depth. Of those 180, we’ve chosen to partner with 33 technology solution providers. We believe these technologies are a best-in-class technology to solve a problem in construction that our customers are facing.
FFF: Clients have gravitated to the Preferred Partners Suite. Why is this resource so important to them?
Hall: Ten years ago, as far as technology geared at construction, the biggest problem was there wasn't any. The biggest problem right now is that there's too much. Four or five years ago, there was less than a half of billion in the Venture Capital (VC) market for construction tech. Two years ago, it was a $2 billion market and in the next two years, it’s projected to be nearly $9 billion. Currently, the market is just flooded with different technologies and contractors are struggling to figure out which ones are the right ones for them.
FFF: What do you look for in a technology partner?
Hall: Adopting technology for contractors is not just like downloading an app on your phone and when you get sick of it, you can delete it and try something else. This is a major investment, both in time and resources for them. Plus, contractors know that there is only so much goodwill coming from the field. We're asking workers in the field, on the jobsite, to do a lot of testing. If they test a lot of things and we implement a lot of things that don't work out, they're going to get pretty tired of it. Therefore, in our tech partners, we look for maturity. We look for customer testimonials above and beyond everything else. We keep this suite of technologies finely curated and elite because that’s the value we provide to our contractors. And we ask our partners to provide a discount to our clients.
FFF: Clients also appreciate the benchmarking services offered. Why do you think they find this so valuable?
Hall: Yes, the Ecosystem’s benchmarking service has been well received. It helps contractors realize where they stand in adopting technology compared to their peers in the industry It's called the Tech Adoption Maturity Index or TAMI, for short. Through TAMI, we can benchmark our contractors across 30 different categories of technology. The two things we look for are what technology is used to support each use case and how well is it implemented across the organization. And we have a scoring system behind that. During a TAMI evaluation, customers have a 90-minute discussion with us on their technology solutions and we'll offer some feedback during the session. Afterwards we'll provide them with a written report that gives them a measurement of where they stand on scale from one to 10, and a comparison against peers of roughly their same size and shape.
We then pick out a couple of their similar-sized peers to compare them against. All peer information is masked, not identifiable. It's a two-sided comparison. One is against specific peers. And the other is against the whole industry and that index, we derived from a variety of research and other construction industry data. Our clients get quantitative results, but in addition, we write personalized recommendations.
We pinpoint where they really excel and why. Then on the flip side, we give them recommendations on how they can accelerate their tech adoption or how to create a roadmap for future adoption. They absolutely love this validation – the strongest scores help legitimize a customer’s innovation efforts to their internal stakeholders, and the weaker scores help support an innovation team’s request for additional support from their internal stakeholders.
FFF: Knowledge Networks are an important part of the Ecosystem now. What networks have been created and why is networking so important to your construction clients?
Hall: Two networks have developed out of the Ecosystem. The Innovator Circle was created by our contractor customers, for our contractor customers. It’s a roundtable consortium of innovation leaders at these contractors; companies coming together and sharing best practices, creating best practices, and generally looking to elevate the industry in construction tech adoption and risk management . There's about 85 members right now across more than 50 top contractors from the ENR 400.
We also have a parallel group, called the Collaboratory, which is a combination of a collaborative and a laboratory. These are advisors that we have that are not our customers, but are leaders in the innovation, construction technology, and insurance space, helping guide the direction of all these programs that we're running.
Networking is a learning opportunity for us and our clients. Tech adoption today is where construction risk management was about 20 years ago. Back then, everybody was trying to figure out what best practices for risk management for a large construction company were. We fumbled around in the dark for a few years. A lot of companies didn’t have a dedicated risk manager and it was hard to spend money on risk management because they couldn’t see an immediate return on investment. Now, in 2022, any contractor that we work with has a risk manager, if not an entire department. And we have conferences and peer groups and best practices, and everybody generally knows how to manage risk. Now innovation and technology are in its infancy stage right now. Across our 85 innovator's circle members, there are ones that have extremely robust programs for innovation and technology. And then there are ones that are just getting started that are looking to those bigger dogs to see how it's done and choose their own path.
FFF: AXA XL provides construction insurance. How does technology adoption connect with the insurance products that you offer.
Hall: We’re looking at ways that risk-reducing technology allows us to develop new products or different classes of business. We’ve already done this with our Mass Timber product and our Highly Protected Projects product. The implementation of technology can help our underwriters feel more comfortable writing a tough construction risk.
We are looking at technologies that in three different categories, the first is a technology that prevents the risk. Prevents a loss. For instance, water mitigation technology IoT that alerts you when there is an anomalous flow, meaning it could be a potential leak and allows you to shut off the valve remotely. Now you've prevented a loss. That's the highest level.
The second one is reducing the loss. If we go back to the water mitigation example, there are pucks that you can buy that sit around your hot water heater at home, and they tell you when the hot water heater leaks because the water hits the puck. That kind of technology helps reduce a loss. You're still going to have a loss because the water already leaked, but now you’re notified that the leak exists and can address it sooner than if it continued to leak until you discovered it on your own, so the loss is probably going to be less than it would be if you didn't have that alert.
And then the final one is monitoring/efficiency technology. These are more data-driven technologies that basically collect data and analyze it. This is how we can pair with a policy and say, well, look, if you're going to have water mitigation in your building with a valve that allows you to shut it off, chances are your water losses are going to be fewer and less severe. In that vein, we can look at possibly adjusting the premium or the deductible on a Builder’s Risk policy, for instance, in consideration of this reduced risk.
FFF: So, what’s next for the Ecosystem?
Hall: The journey I've seen in the last three and a half years has been so inspiring. While construction is traditionally considered laggards in technology adoption, this industry has picked it up faster than everyone expected. I can't wait to see what the future holds. I think it's going to pick up bigger and faster. I think that it's going to be more challenging for the right technologies to emerge and stay relevant because of all the money that's flowing into the industry right now. Collaboration across the industry, like we’re seeing in our Innovator Circle, is going to help accelerate the right technologies for our industry and help accelerate the adoption of them as well.
Many of our technology partners serve a variety of other industries, and our services and insurance products are applicable across our entire customer base. Once we got the model right in construction, I see this as an easily scalable model across all our lines of business. Our Environmental insurance team has already rolled out its version of the Ecosystem to environmental clients. Our Property and General Liability teams are looking to do the same with our existing tech partners and others that they are scoping out. Colleagues across AXA XL as well as our brokers and clients are very interested in how greater tech adoption and collaboration can help us all reduce the cost of risk.
FFF: Is this why you’ve stepped into a new broader role as Head of Innovation for the Americas?
Hall: Yes, in part. We’ve learned a lot during our journey building the Ecosystem and watching it evolve. A lot of those lessons can bring benefits to other product lines. But it’s even bigger than that. In my new role, I lead the Americas Office of Innovation. The office represents a dedicated, regional resource to help us develop strategic partnerships, deploy customer-facing innovation like the Ecosystem across business lines, and align with Axa Group’s innovation plans like the company’s planned Digital Commercial Platform (DCP).
I'm excited to see what happens next. We believe we can truly disrupt commercial insurance industry.
