Digitalization of the Insurance Industry: Trends and Innovations

Digitalization has been the trend in nearly every global business sector, including insurance. What is AXA’s ambition when it comes to Data & Digital and how does it relate to its broader strategy?

Georges Desvaux: Our customers want AXA to be a true partner and to bring more than “just insurance.” They recognize that the world and the risk landscape are changing at an unprecedented pace, which warrants changes to the way that they do business and how they protect what matters to them. Data & Digital enables us to deliver solutions to this challenge. Our ambition, both at AXA Group and AXA XL, is to deliver new services which complement traditional insurance and better protect our customers. We are transforming our own vision of what an insurer is, from payer to partner, with our clients every step of the way. Digital innovation is at the heart of Driving Progress 2023. Without it, there would be no possible way for us to accomplish our strategic plan.

AXA recently launched a Digital Commercial Platform (DCP). Is this a central component of Driving Progress?

Scott Gunter: With the DCP, we are going to be expanding and growing our services to our P&C Commercial clients while simplifying our customers’ experience, strengthening the protection we offer as an insurer, and contributing to sustainability. Our ambition is to develop an innovative global solution that provides value to our commercial lines clients beyond protection, by providing assessments of risks, and prevention advice and services not just the former – because we recognize that traditional insurance is no longer the sole answer to our clients’ evolving risks.  

What do you think have been the contributing factors to this shift to focus on prevention?

GD: Two key trends have converged to tip the scales: the growing complexity of risks we face as a society, and the ever-increasing availability of data and artificial intelligence tools. In some ways, one begets the other. Our aspiration as a commercial insurer is to help industries develop their businesses by protecting them from risks. However, many new risks emerge, as the industry evolves, such as increased severity of nat cat on physical assets, or cyber security on the ever-increasing digital part of the economy. To protect these, we need risk transfer but more importantly prevention to reduce the risks and severity of claims, thus fulfilling our role as partners.

SG: Absolutely. We have access to an enormous amount of data and new technologies, such as satellites, drones, and sensors, to evaluate and even “predict” adverse events in real-time. These tools allow us to be there for our clients, many of which are among the largest companies in the world, in ways we could have never previously imagined.

GD: That’s why moving towards prevention has become both feasible and critical. As I mentioned, I believe prevention through predictive technologies will become commonplace in certain insurance sectors. And this isn’t simply an internal perspective. In conversations with our clients in recent years, the vast majority cite how important prevention is and that they expect their insurer to be able to help them mitigate risks in their business, no matter the industry.

How exactly do you see preventive technologies changing the insurance landscape in the future? What advances are we likely to see?

GD: Let’s take commercial buildings as an example. It’s easy to envision a near future where fully connected, smart buildings can self-report fire risks and request repairs based on data from hundreds of sensors parsed and evaluated through artificial intelligence, a collective “consciousness” for building health. As AI technology becomes commoditized, there are myriad applications to leverage its predictive power. One can imagine every home eventually having access to similar technology. Clearly, this would significantly shift insurers' relationships with their clients, from today’s model where insurers are viewed primarily as “payers,” only involved after an accident or disaster, to partners in ongoing risk mitigation.

SG: We are likely to see an increase in digital and remotely delivered services. With DCP, fundamentally, we are building a platform for insurance and risk management services that will transform our value proposition and the way we operate to serve our clients. This is, we believe, increasingly what clients need and will look for from their insurance partner. This is true for physical assets but also for digital assets. For example, we face greater cybersecurity risks today than at any other moment of history, but we also have more power to leverage digital tools than ever before.

Could you give a few examples of the services that are supporting this platform? How do you see them concretely benefitting clients?

SG: The DCP is made up of two parts. The first is AXA Smart Services, which is an open ecosystem of services built by AXA or partners dedicated to both AXA’s commercial line clients and AXA’s internal users such as underwriters, pricing teams, etc. 

As Georges mentioned, smart buildings have been a focus for us. Over time, commercial buildings and assets can become less efficient making them prone to unseen risks. During periods when a building is unoccupied or only partially occupied, these risks may be magnified.

We created the Digital Risk Engineer service, which uses Internet of Things (IoT) technology to monitor the health of assets and buildings around the world remotely. An easy-to-install device is integrated seamlessly with a building to capture real-time data from connected systems such as energy, water, heating, ventilation, and air conditioning (HVAC).

The data and insights are accessible to our clients and AXA via an online dashboard. The customisable, centralised dashboard gives a holistic overview of all building locations and assets, it alerts our clients to any problems and can benchmark the performance of different locations. It has already proven to be highly valuable: A client identified and fixed six major flaws in its site operation, saving an estimated €165K in future repairs, and was able to save 15% in power consumption after just three months of using the tool.

We are also working on expanding our use of location intelligence to gain better insights into the assets we are covering and the risks they are exposed to. This will allow us to partner with clients to understand their risks in real-time. 

The second part of the DCP is AXA Climate, which is an open ecosystem based on science, data, and technology that will provide a range of services to our corporate and institutional clients, including training, consulting, insurance, and financing. The goal is to provide both traditional services to help clients improve their sustainability as well as develop innovative solutions to help protect businesses, crops, and natural ecosystems using geospatial, scientific, and satellite-based data.

GD: It is also important to note that the DCP will serve to improve our existing services and the capabilities of our internal teams, whether that be underwriting, pricing, claims, etc. The new knowledge and data gained through the DCP will enable us to create a virtuous cycle of continuous improvement for our customers externally and our operations internally.

What other significant risks can be addressed by AI, data, and a digital insurance ecosystem?

GD: One can imagine many applications and potential benefits, from preventing automobile accidents and building fires, to the reduction of crop loss through efficient resource allocation, but perhaps the most powerful application of a digital insurance ecosystem is against technology risks themselves.

SG: I’ll add that with COVID-19, we saw unprecedented interruption in global supply chains, which had become increasingly vulnerable. Longer and longer chains developed, working to just-in-time delivery schedules with little room for delay. There is a real opportunity for AI and similar technology to help identify vulnerabilities in global supply chains or similar complex systems and mitigate issues like those we’ve seen in the past two years.

What impact do you believe technologies like the DCP could have on broader society?

GD: Between the Smart Services and AXA Climate platforms, we are building an open-source infrastructure that enables data sharing. Over time, this open ecosystem will enable us to deliver insights on a range of issues, both for our clients and for external stakeholders. The aim is to move beyond “simple” risk management and prevention toward societal benefits, whether that is to anticipate the locations of wildfires or floods, to help build communities that are more strategically resilient to climate change, or to provide real-time, targeted services in emerging or precarious markets to bolster their financial stability. For us, this is what it means to act for human progress by protecting what matters: using the data and tools at our disposal productively to maximize benefits for all.

SG: This is definitely our long-term ambition for the DCP – to develop a platform that can mitigate risk while contributing to solving societal challenges.