AXA Insurance has launched transactional APIs in Singapore that are the first step to recreating its business model, from one based on selling policies, to one that provides Insurance-as-a-Service (IaaS) across electronic networks.
Tomasz Kurczyk, Singapore-based director of digital transformation, says in 2018 the firm’s attention will expand from offering products digitally to building personalized insights into customers.
This will be increasingly important to selling life insurance, health insurance and other complex products digitally.
“Insurance-as-a-Service combines traditional products with a new way of selling them, which requires a new mindset,” he said. “The future of insurance is the distribution of insurance products through a digital ecosystem.”
AXA’s first foray into digital selling is via a partnership with SATS, a Singaporean provider of aviation and airport services and food, which launched a travel app for passengers; AXA is providing travel insurance on the back of it.
But to sell bigger-premium products like life insurance, the firm will need a much greater view of the person and their personal risk. This will require a host of data sources, including wearables, home or car sensors, and partner data such as what SATS can provide.
“We’re moving digital insurance to customer-first,” as opposed to product-first, Kurczyk said, “but it’s still at the contract level. It’s not yet about risk. We want to build an individual risk profile.”
The API rollout, which was announced earlier this month, is the necessary step to connect with a planned ecosystem to include many more companies than SATS.
“It’s about insuring the moment,” Kurczyk said, “it’s about being in the moment with the customer.” APIs aren’t enough: this kind of business approach requires a redesign of policies, away from relying on annual premiums to products that customers pay for as they use them.
This goes for all lines of business, including selling property-and-casualty policies to businesses big and small, or life and health. An early push will be in employee-related insurance, which can encompass many types of products.
Kurczyk says AXA will bring ‘in the moment’ digital offerings to employee benefits. “No one’s ventured into digital commercial insurance yet,” he said.
Employers have a lot of data in their human-resource departments that can help the insurer tailor policies for individual employees at scale. “We become your risk manager,” he said of potential employees of client companies.
There are a number of challenges to realizing this shift of business models, including building the right ecosystem, finding and retaining enough technologists, and keeping traditional business managers on side.
- Partners: Insurance companies can’t do it alone. The biggest insurance brands in the world outside of China are fragmented; AXA has just 4% of global market share, Kurczyk says. The global insurance industry as a whole is huge (in 2016 it saw $4.1 trillion of premium turnover, he says) but it’s fragmented, especially by regulation and licensing. This complicates partnerships: an airline, say, may operate in dozens of countries, but AXA would need licenses in each market to offer policies to the airline’s customers.
- Talent: Insurers in general need to find enough engineers, data scientists and other technology people. Kurczyk cites China’s Zhong An as “a huge eye-opener” to the industry. The majority of Zhong An’s people are engineers and only maybe 20% are traditional insurance people, whereas traditional insurers are staffed in reverse proportions. Kurczyk says AXA has made a lot of progress in this regard: he joined 18 months ago without a team; today he oversees 40 people.
- Management: Getting traditional insurance managers to support digital initiatives that take several years to realize gains is a challenge, as is ensuring technology staff finds reasons to stick around when results are piecemeal. Adding to the uncertainty, AXA is going through a global restructuring under its new CEO, Thomas Buberl, although he is prioritizing digital transformation. Earlier this month, the firm announced Gordon Watson, regional chief executive at AIA, will take over as AXA’s Asia CEO.