More than a paper policy
The insurance business model evolves to partnership
Too many businesses realize the value of their insurance coverage only after the fact, after they lose something first. That means too many are missing out on reaping the full value of their insurance programs. At the same time, that means that we, as insurers, need to step up our game to make sure that they do.
Of course, insurance claim pay-outs have helped many recover, rebuild and get back to business. That aspect of insurance is not going to change. But we need to show our clients how much more we can do. We need to showcase the additional value that insurance, and those of us who provide it, bring to the table.
It’s time to change the perception that insurers only step in when our clients have filed a claim, when something is broken, or when they need the financial assistance to fix it.
Shifting the model
This shift in our business model – to evolve the insurer/insured relationship into a partnership – hinges on our desire to provide comprehensive risk management solutions and raise insurance up to be a service that can lower overall costs, preserve reputation, support financial and operational business goals and more.
Today’s global economy and operating environment supports this concept. Business is increasingly complex, constantly changing and more connected than ever. Few want to go it alone or can do the heavy lifting themselves when there’s more to know than what they can get at from their vantage point.
As someone who started in this industry as a risk engineer, I can tell you moving from what has been the traditional “repair/reimburse-after-an-event” model to a more “predict/prevent-before-an-event-even-occurs” model is a natural transition at an opportune time.
With increasingly severe weather patterns, more global volatility, growing cyber concerns – you name it – there are huge reasons for companies to reinforce preparedness and pay closer attention to predictions that could help them avoid potential risk altogether. This is where this evolving insurance business model is intent on delivering.
Carriers, like AXA XL, are boosting their risk engineering/loss prevention, data analytics, crisis management and other capabilities to gain better control over the risks that we, as insurers, assume or the risks that we can help our clients avoid. We’re helping more clients address their exposures head-on, not waiting around for something to happen.
What you need, not what we think you need
An evolution has to start somewhere. For insurance, there is no better place to start that with the paper, the actual insurance policy. In many respects, insurance coverages have to evolve in order to include broader, more comprehensive coverage and policy terms.
Listening is central in developing appropriate insurance protection. What clients say they need and what comes out of a discussion can be two different things. That’s why we make regular dialogue a habit. We listen to their concerns, struggles, and ask about what they see on the horizon. They help us understand what is truly needed from an insurance partner perspective. Then we can come up with ideal ways to support them with insurance coverage and supplementary services to help avoid potential risks and evade subsequent losses.
We’ve seen how a simple driver training program has helped clients lower their auto fleet claims; or how advance preparedness ahead of a storm can have great impact in minimizing damage; or how employee education can go a long way in thwarting a hacker. Combining this insights with the information insurers are privy to, we can provide the right support needed and develop new or adapt current approaches and offerings. That’s how we’ll know we are meeting businesses risk needs now and in the future.
Access to intel
Insurance has always relied on information to make our underwriting decisions. It’s key to predicting and preventing. So, wouldn’t it be valuable for our clients to have it too? We’re constantly looking at how we can share more of the right information effectively to better our clients’ loss prevention efforts.
" We’re constantly looking at how we can share more of the right information effectively to better our clients’ loss prevention efforts.
For instance, XL Risk Consulting, our risk engineering unit, recently launched an enhanced loss prevention platform for our clients. Through the platform, our clients have access to loss prevention recommendations, detailed data and analytics about their risk profile, and loss prevention recommendations to help them improve it. There’s even more proactive real-time analytics that will offer our clients “what if” scenarios to help them determine the most ‘bang for their buck.” They can prioritize their loss prevention program spending by determining where they have the most to gain from their spend.
We give our clients access to more information than ever before so they can make informed decisions up front. Given the decades that our underwriters, risk engineers and claims specialists have spent working with clients in many and varied industries, they will benefit from these added insights.
Of course, as with any relationship, trust plays a big part, and each party has to be “all in” to make it work. The insurer/insured relationship requires much information sharing and open communication both ways to be truly successful.
And the tech to help
It goes without saying that technology plays a big role in this insurance model shift. Technology is helping us keep a closer eye on conditions and collect real time information that not only helps in our insurance underwriting but can be invaluable to our clients’ day-to-day operations.
In partnering with InsureTech firms, we are learning how new technology can help us in underwriting risks but also help our clients find the best way to optimize new technologies in their operations. Currently, our Construction insurance team is taking a lead in this area. Through pilot programs with our Construction clients, we’re testing new technology to help clients navigate the many new tech options available to them.
There’s an additional benefit to the new insurance business model, and that is the opportunity for the industry to bring in more professionals with unique subject matter insights, from engineers and data scientists to professionals with deep technology know-how.
We are demonstrating our value as a source of data, information and risk transfer solutions that will push businesses ahead in new and exciting ways. We are, indeed, a more integral part of our clients’ operations. They are raising their hands for help to make the necessary operational changes and committing to the training that can help them and us – together – prevent losses.
Giving clients full access to us for collaboration, planning and risk mitigation, helping them take advantage of new technologies and to mine our intelligence allows us to build tight relationships, advance the industry, and drive the change of the insurance industry’s image from a payer of claims to a risk management partner. And that’s what we’re intent on doing.
About the Author
Joe Tocco is AXA XL’s Chief Executive for North America Insurance.