When your grandparents advised, “Don’t put all of your eggs in one basket,” they probably weren’t referring to commercial insurance coverage for a multinational corporation. Indeed, in an ever-fluid world, risks arise today that an earlier generation would never have imagined. Anticipating and understanding the unique challenges of each industry, and each individual business, is crucial to assuring you have all the coverage you need, delivered as soon as you need it. As the president of AXA XL’s North America Construction unit, Gary S. Kaplan and his team work with clients in an inherently risky industry, where complicated projects are common and delayed claims mean compounded losses. They’ve spent years developing a team-oriented approach to providing comprehensive coverage and service customized to fit each client’s needs. We spoke to Kaplan about how this approach works, not only in the construction industry but in any line of business, and why it makes sense for companies with complex risk profiles to keep insurance coverage simple and—ignoring the wisdom of our elders just this once—in one basket.
Q: AXA XL is positioning itself as a comprehensive risk management firm rather than as simply an insurance company. Is there more of a need for this sort of service now than in the past?
A: I believe so. Take cyber: With our cyber insurance, you’re of course buying a certain level of indemnity coverage, but you’re also buying expertise to help you if, for example, the company’s system gets hacked. One of our customers told us about an experience they had under a different carrier. Someone working in HR sent all of the employees’ W2 information to a person they thought was the CEO. That information got out. The risk management department tried to get a hold of the insurance company. They’d purchased their cyber coverage overseas, and they were on the East Coast where it was 2 PM in the afternoon, so the insurance people they needed help from weren’t there. The customer described this as the worst moment ever, when she realized there was no one to help her—and those first couple of hours are the most critical when it comes to a cyberattack. So having a relationship with a company you can contact immediately, anytime, for help is just one of the services our customers get.
Q: So offering comprehensive risk management services is not simply bundling various types of insurance into one package. There’s more to it than that.Q: So offering comprehensive risk management services is not simply bundling various types of insurance into one package. There’s more to it than that.
A: Right, it’s not just the products. Insurers that just deliver products are a dime a dozen. The smart risk managers and the more sophisticated companies are looking for an insurer that can deliver really strong services along with the coverage. Another example is crisis management. With some of our policies, the customer has the option to add a service where we can help them deal with a crisis. For example, a tunnel collapses, and there are fatalities. We have experts that can go in and assist the customer with all aspects of this tragedy—the public relations and the news. We help them craft a message so they come through the crisis in a better position than if they didn’t have that help. So it’s not just the indemnity piece they’re buying from us, it’s those services that help smooth over the situation.
Q: I suppose this service model makes relationships important, doesn’t it?
A: Yes, especially for the customers with the most complex risk profiles. They absolutely see the benefit of having a relationship with their insurer. In construction, they won’t give us their business unless they have a relationship and feel they can lean on us. It’s almost like leverage—they feel comfortable that they can call us up if a claim isn’t going as fast as they need it to. They can get us to sit down with them, with our claims team and without lawyers, and come to an understanding where their policy does and does not cover the situation, and therefore money should be flowing to them so they can keep their project going.
Q: It might make some business owners nervous to have all their insurance needs met by one insurer. Can you explain the benefits for the customer? Why should my company choose the one-stop-shop approach?
A: Complicated coverages, whether in construction or anywhere else, mean there are lots of opportunities for claims to be triggered. And the more people and companies involved, the more time-consuming it’s going to be and the longer it’s going to take for the customer to get paid.
For example, we sell 10 different products in the construction unit. If a customer uses 10 different carriers for those policies, it can get dicey. If the claim is not crystal clear, carrier No. 1—say that’s us—we might not think something’s covered under our policy; we think it’s supposed to be covered under the policy issued by one of our competitors. We’re reluctant to pay that claim because ultimately, we don’t want to pay someone else’s claim. We want to pay fairly, but only what’s covered under our policy. So if you have 10 different carriers, and you have a complicated claim, all the claims departments could be saying, “No, that’s covered over there.”
This causes delays for the customer. They’re not receiving that flow of money they expected when they purchased all these policies. Our customers find that if they have one carrier, the delay goes away. We simply have to make sure that it is covered somewhere. And we craft the order in which the policies pay—this coverage is meant to pay first, and this coverage is meant to pay in excess of that, and so on.
Q: AXA XL’s model is built on collaboration. Can you describe an example of a complicated claim you’ve dealt with and how your team of professionals worked together for the client?
A: I remember one claim where the building was a high-rise, 20 stories built with reinforced heavy concrete. They were building it on a beach, and it started to sink. And just as they recognized the building was starting to sink, it got hit by a hurricane. So now there are at least three things going on: A problem with the architect’s analysis on the foundation, maybe something wrong with the building’s construction and hurricane damage. Now you have this huge building sitting there, 80 percent complete, that looks like the Leaning Tower of Pisa and is fast becoming a giant bird’s nest.
There were six different coverages that potentially had to respond to that claim, which means six different groups of claims people had to come together in a coordinated effort. For bigger accounts where we provide multiple coverages, we pick someone the customer feels comfortable with and make them the primary contact. So we have one person assigned as the team leader to help coordinate everything. Then we work to come up with a solution that helps rectify what happened. In that particular instance, we got our claims team together with the customer, we cut a check and they were happy. They blew up the building and moved on.
Q: The practice of cross-selling can sometimes have a negative connotation. Can you explain the process a team goes through to determine whether a business needs additional products and services? In other words, how do you assure your clients that the additional products you offer them are in their best interest and not simply selling for selling’s sake?
A: Listening to what customers think is the most important part of delivering products they want to buy. This requires training your people to ask the right questions to find out what’s valuable to the customer and what’s not. We teach line-of-business experts how to think more broadly about the relationship, how to ask questions that don’t drill down to a single product and instead focus on a company’s strategy. You want to find out where they’re going, where they’re having issues, where they see opportunity. If you’re not listening to the customer, you might be doing something wrong.
Q: And what if you discover you are doing something wrong? A lot of companies find change difficult and can be incredibly slow at shifting priorities or making progress.
A: We learn from losses, and we try to improve how our products and services work. One example is filling gaps in coverage. In the fall of last year, we announced our Platinum Plus product, which takes our master builder’s risk policy and attaches it to our global property coverage. So say, I’m a big company – maybe a major retailer or tech giant — and I’m building an addition to a big distribution or tech center. There’s this point where the building is handed over, so as the owner, my policy is now responsible and not the construction risk or the wrap-up policy. And there are instances where the building is handed over in phases. By having one carrier for the property coverage and the master builder’s risk policy, there’s no issue because we’re covering the building throughout its lifecycle. We’ve created a product that fills that gap for the customer.
Ultimately, it comes down to learning. The learning process is really critical. If there’s a claim—the underwriters, the risk engineers, the claims people—we all learn from it. So we not only help the customer lower their risks in the future, we learn how to improve our offerings and service and support. This only happens when you work on a cross-functional basis and have a deep relationship with your insurer.
Read more to learn how to cover your risk from all directions.
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