Product Family

The Construction and Insurance industries have many things in common.  Both industries have a long, venerable history.  Both are dealing with an aging workforce and the challenge of developing new talent.  Each has been operating recently in a very prolonged competitive market with slim profit margins, requiring strong risk management practices to navigate successfully. 

And both industries have not been known for being innovative.  Fortunately, that perception is changing quickly.  The construction industry has already had its share of innovation.  Alternative delivery systems like Public Private Partnerships, Integrated Project Delivery as well as Building Information Modeling (BIM) aim to address construction clients’ changing needs.  Other examples include Green building, modular construction, automated equipment, and 3D printing.  And now, we are seeing all kinds of digital monitoring devices for human behavior, atmospheric conditions, waterflow, security and video records with cameras on drones. 

Yes, the Construction industry is, in fact, a source of many new ideas and one that I certainly drew from when building XL Catlin’s Construction insurance business. Construction is driven by projects and that’s why my team has adopted a project-centric leadership, planning and execution model. We use the model every day to drive our profitable growth by listening to the needs of our clients’ and turning the best ideas into projects that help drive innovation.

Construction innovation is also leading to more insurance innovation as we look for ways to address these new delivery systems, materials and implementation of new technologies.  Still, both industries would undoubtedly agree, we need to be doing more. 

From my perspective, innovation comes in many ways but often take shape as an enhancement, an expansion, an evolution and occasionally, we see a revolution. The revolution-type, bigger innovations are harder to come by and usually require a dedicated team focused on it full time for some period of time.  This is where many start-ups in both Insurtech and Con-Tech are looking to make their mark. We launched our own venture capital initiative, XL Innovate as a means to help drive more innovation.

Building a Framework

Smaller innovations – those enhancements, expansions and evolutions – can happen more frequently from all parts of an organization to make a big collective impact.   Several things help – a corporate culture that supports innovation, a process to execute, freedom to do it and customers.  Innovation meets a need. It’s often customer problems that lead to product ideas.     

People must feel empowered to innovate.  That’s why corporate culture is so important.   At XL Catlin, we have these two directives -- Make it Better and Be Future Focused.   Colleagues have rallied around them and it’s helped create the right setting to stimulate creativity, and offer the freedom to push the boundaries of out of the box thinking and sponsor low risk experiments to test ideas.

As far as process, we really like the Rapid Results Initiative (RRI) project process.  RRIs are experiments, lower risk projects that empower teams to try something new to generate a result in a short time frame (usually 90-days) to prove or disprove a hypothesis.  This short term project almost always results in innovative changes to existing processes or the creation of new products or processes.  Asking the RRI teams to generate a tangible result in less than 90 days creates excitement and opens the door to experimentation, innovation and measured risk taking.

Fueled by Feedback

As mentioned before, innovation comes from a need.  To determine what’s needed and what we can do about it, we have developed a more formal process to gather feedback from our brokers and customers.  Everyone on our team is charged with listening to the customer.  We’ve invested heavily to improve our collective skills in developing and maximizing relationships, listening, and consultive selling, describing our specific value proposition and more.  We listen better and capture what we hear.  

Each year we have set opportunities to listen to the voice of the customer, including North America’s top contractors and their brokers, at key industry conferences like IRMI’s Construction Insurance Conference.  It’s important to take advantage of every customer interaction opportunity including customer meetings, claims reviews, and risk engineering sessions.   

Each of our team members is trained to collect this feedback from the customer and feeds it our leadership team. We use this information in our review of the ongoing Operational Plan, consider new ideas and innovations that arise and prioritize against projects already underway or planned.  We are continuously improving based on what we hear and what we do to change our focus.


Without innovation we are no different than everyone else; we are a commodity. Neither contractors nor insurers can afford to be that.

Innovation in Action

Support of this process has been contagious because it really works.  For example, when we heard that many of our largest customers really wanted more flexibility, control and cost savings in their General Liability (GL) coverage for wrap up projects, we developed a new GL only Plus wrap up program.  Now, we’re working on a Weather Analytics pilot with four of our largest customers to see how we can use weather data to de-risk weather’s impact of on their projects.

An interesting thing about innovation is that it’s boldly collaborative. It requires sharing of ideas and resources -- between competitors, customers, new business partners like tech start-ups, trusted business partners like our agents and brokers -- to make it happen. 

A lot of that is happening and we need to push for more.  It’s going to help our construction clients improve productivity, safety, quality assurance, subcontractor selection and management, planning and documentation management – all of which can make construction firms better risks for us and give us the opportunity to provide even better products and services to the construction industry. 

Consider the development of Pillar Technologies, a recent XL Innovate investment, which deploys industrial-grade sensors across construction sites to address high-value risks during and after construction by actively monitoring key environmental factors, such as temperature, pressure, humidity, smoke, and dust. General contractors and insurers are using the Pillar data management platform to monitor sites, forecast failures, and be alerted to costly hazards such as water leaks, freezes, fire, mold risks and more. The ability to give customers access to better decision making not only helps their business but also allows us to see how these new technologies will change the insurance market place.

Final Thoughts

Innovation leads to competitive advantages.  Without innovation we are no different than everyone else; we are a commodity.  Neither contractors nor insurers can afford to be that. 

As one of my wise underwriters, Lawrence Lejfer, once said, “There are no brakes on the innovation bus.”  While that may sound unsafe from a risk management perspective, from an innovation perspective, playing it safe is the biggest risk of all. 

About the Author

Gary Kaplan is president of XL Catlin’s North America Construction business. 



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