Cheri Hanes is Vice President and Head of Construction Innovation and Sustainability at AXA XL, the US commercial subsidiary of French $89 billion insurance giant AXA. Before joining AXA, Hanes served in operational and sustainability roles at several other construction companies.
We conected with her recently on the three pillars her team is built on; progress metrics; managing the risks of new technologies; and how AXA XL is embracing AI.
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Give us the quick overview of AXA XL.
AXA XL is the property and casualty and specialty risk division of AXA. We provide insurance and risk management products and services for mid-sized to multinational companies, and offer insurance for a wide range of risks, including property, casualty, professional, and specialty lines. Our goal is to partner with businesses to help them manage their risks and protect their assets through innovative insurance and risk management solutions.
And you’ve got an interesting title. What does it mean?
As Head of Construction Innovation and Sustainability for an insurer, I get involved in identifying and implementing innovative solutions specifically related to evolving construction risks and meaningful insurance products and services. This could include leveraging technology and data analytics to assess and mitigate construction risks and improve sustainability, developing new insurance products tailored to the evolving needs of the construction industry, and collaborating with construction professionals to address industry-specific challenges. The focus is on driving innovation in insurance offerings and risk management practices to better serve our construction clients and adapt to industry changes. On my team, we do this using three pillars:
Pillar One is tech partnerships. Our portfolio of solution providers is curated to help our clients reduce risk, promote sustainability, and grow their businesses. We partner with tech solutions including enterprise software, field management tools, IoT sensors and devices, and reality capture.
Pillar Two is our suite of proprietary benchmarking services, which are designed to help our clients advance risk management through comparative assessments with their peers and the overall industry, and personalized recommendations. Some examples include our Tech Adoption Maturity Index (TAMI), our AI-enabled Contract Review Benchmarking (CRBM), as well as benchmarking services focused on subcontractor prequalification, scheduling practices, quality practices – and, coming soon – Sustainable building practices.
And the third pillar is thought leadership. In addition to conversations just like this, papers, articles, and presentations, we also facilitate industry knowledge networks which are dynamic, collaborative peer networks of innovation leaders and sustainable construction leaders, from our insured partners, who collectively source problems to solve, share knowledge, and develop strategies with a goal of elevating not just the group, but the entire industry. They are true powerhouses addressing some of the most challenging problems in construction today, and honestly one of the best parts of my job.
Everything we do, we do with the goal of promoting a culture of innovation and sustainability in construction.
Goals and Metrics
Do you have specific goals and objectives you need to hit?
Certainly. My team serves two constituencies – our clients, but also, our internal folks – the risk engineers, underwriters, department heads, etc.
For the externally-facing effort, we are looking at metrics around uptake and engagement for our offerings, and, of course, what they tell us about the relevance of what we’re doing.
Internally, measurement is a bit more complex. What we are looking to do there is build the knowledge and resources our internal teams need to have conversations around technology, innovation, and sustainability with our clients. That’s much harder to measure…
Internally, measurement is a bit more complex. What we are looking to do there is build the knowledge and resources our internal teams need to have conversations around technology, innovation, and sustainability with our clients. That’s much harder to measure, but – if the external metrics look good – that reflects that our folks are having those conversations out in the wild, which tells us we are, in fact, getting them the tools and knowledge they need to do that.
How do you measure progress?
One way is through what we learn from our benchmarking services I mentioned earlier. For example, the Tech Adoption Maturity Index (TAMI) provides an interesting lens on this. TAMI is a unique benchmarking service that evaluates a construction company’s level of technology adoption against our proprietary industry index and their peers. To measure tech adoption maturity, we look at four categories of technology: Enterprise Software, Field Management, IoT, and Reality Capture, and category one focused on Corporate Commitment. The report provides a quantitative score and qualitative suggestions to help builders reduce and manage risk, while advancing their businesses through technology adoption. (For a deeper overview, see the PDF below.)
Through this service, we gain a really interesting perspective on tech adoption and innovation. I mentioned that we let companies see how they are doing compared to the rest of the industry, and we do this with an industry index we created back in 2020. We calibrate that index every year, based on what we learn from the benchmarks we do over the course of the year. If we chart that out to look at over time, you can see that it’s a steady increase across the board. The index low, average, and high are all increasing. What’s really interesting is that this year, we expect the index average to break the ceiling of our initial index high from 2020 – just four years ago. So don’t let anyone tell you construction isn’t progressing. They are, and fast.
Artificial Intelligence’s Impact
That’s interesting, as a lot of our members struggle with measuring innovation and benchmarketing. What about AI specifically? How is it impacting your role?
Honestly, I could spend all my time researching, talking about, and working on this one topic. It’s that hot right now. So, there is that aspect of it; it has been a focus in our knowledge networks, and we have partnered with research efforts to get content and guidance out there.
AI is also enabling me and my colleagues to leverage data-driven insights and automation to enhance risk assessment, claims management, our underwriting processes and more.
AI is significantly influencing what innovation we might bring to our clients.
Plus, for my role, AI is significantly influencing what innovation we might bring to our clients. We’re always looking at AI-driven solutions and new technology that may be driving innovation for our clients by enhancing efficiency, improving decision-making, and creating new opportunities for businesses to better serve their clients.
Has the company fully embraced AI, or are you still — like most companies — at the early stages?
We are embracing it, while moving carefully and watching developments – which is like watching a YouTube video on 2x speed – it is moving so fast!
AXA has been actively embracing AI across various aspects of its operations. AI is utilized in risk assessment and underwriting processes, allowing for more accurate and personalized insurance offerings. In claims processing, AI helps in automating routine tasks, accelerating the handling of claims, and detecting potential fraud. AXA is also leveraging AI for data analysis to gain insights into customer needs, market trends, and risk management. Overall, AXA’s integration of AI is aimed at improving customer experience, operational efficiency, and risk management across its various business lines.
Yeah, that’s fairly pervasive. How do you think AI is going to impact the industry overall?
Here’s my hope: I hope that AI helps us to focus on doing the parts of our jobs that are most uniquely human: those that require our expertise, our art — things machines can’t do — and takes away some of the drudgery that keeps us from focusing on that. Everyone is happier when they get to focus on those truly human parts of their jobs, and AI seems like it could enable that.
Practically, there’s so much potential impact. One key area is in project management, where AI can be used to optimize schedules, manage resources, and predict potential delays or cost overruns. Additionally, AI-powered drones and robots can be employed for tasks such as surveying, site inspections, and even construction itself, leading to increased efficiency, quality, and safety. AI can also improve design and planning through advanced simulations and generative design algorithms. AI has the ability to iterate endlessly, where we were previously constrained by human bandwidth. That’s big, and some important solutions are bound to come from that fact alone. Furthermore, AI-enabled predictive maintenance can help in monitoring equipment and systems and preventing breakdowns. Overall, AI has the potential to revolutionize the construction industry by streamlining processes, reducing costs, and enhancing overall project outcomes.
Digital twins, particularly, are interesting right now. …As construction companies are required to turn over more and more information about the building, its materials, and ongoing O&M requirements, digital twins may ultimately prove to be an efficient way to house and transfer all that information.
What are some of the other emerging technologies you’re looking at employing?
The place where we are seeing most impressive increase in tech uptake is reality capture. From drones, AR/VR, imagery, digital twins, and scanning, more of our clients are seeing the value and adopting those technologies.
Digital twins, particularly, are interesting right now. Adoption of digital twins has historically lagged, only being used when the owner requires one, but, as construction companies are required to turn over more and more information about the building, its materials, and ongoing O&M requirements, digital twins may ultimately prove to be an efficient way to house and transfer all that information.
Innovation in Regulated Industries
A lot of our members work in highly-regulated industries — like energy and financial services — where innovation is extraordinarily complex. I’m assuming that’s similar in the construction industry. What are some of the obstacles to innovation?
Innovation is not always viewed as natural for construction companies. The industry has a reputation for being tradition bound — and rightfully so, it does have some great traditions!
However, one of the most important is creativity. After all, at its core, what is construction but constantly figuring out how to build something better, to realize a new idea, to find a more efficient way to do quality work? It is true that most construction companies have been successful due to strict adherence to standard processes and procedures. Certainly, innovation is not that; it involves constant, iterative, and disruptive change. It starts with the desire to change. To disrupt. To fail fast and learn faster. So, there can be a perceived disconnect there. But we know that innovation is crucial in companies that want to remain relevant, attractive to the market and the workforce, and maybe even get a step ahead of the pack. I believe it is in the nature of the construction business to creatively figure this challenge out just like all the ones before it.
There is also a need for specialized skills and expertise to implement and manage innovative technologies effectively. Overcoming these obstacles requires a concerted effort to change mindsets, foster collaboration, invest in training, and demonstrate the long-term benefits of innovation in construction.
Fortunately, on both counts, our clients “get it” and we’ve seen great tech adoption in our client-base.
How do you assess and manage the risks associated with adopting new construction technologies?
The first, and probably most common, risk of tech adoption may be paying for a tech, and going through the pain of implementation, only to discover it’s not really what you needed. Ouch.
To prevent that, the first step is to understand WHY a tech makes sense for your organization. This step has to come before you start looking at specific solutions. Start with “why,” as Simon Sinek says. This requires some organizational soul-searching, of course, but is worth it. This focus does a couple of things: it helps make it clear WHY you are adding the technology to your process (which will matter a lot to the people who will actually use the tech) and it ensures the outcomes and data you get from the tech will actually be meaningful to the organization. Starting with the problem to solve is the critical first step to preventing a bad tech investment.
Once they understand why a tech solution makes sense, companies should work to understand the two parts of the ROI of a technology: the value proposition, and the way in which it affects risk.
The first – the value proposition – has two parts: the core value proposition (what the tech does) and the data value proposition (what you can learn from the data produced by the tech.)
The core value proposition is tied up in how a technology improves an actual risk through its function. This is the more important of these two, because, if the technology solves an actual problem you have, the data you get from the technology will always be useful to you. If not, it probably won’t.
The second piece of the ROI is the size of the risk and how the technology impacts it, and there are two ways in which technology does this: through loss prevention, and through loss reduction.
- Loss Prevention — These are technologies that prevent an incident. As an example, consider water mitigation technologies; there are technologies that detect unusual activity in the flow of water in systems and shut off a valve if something is not right – that prevents a loss. That’s loss prevention.
- Loss Reduction Tools — These are water technologies that identify that there is water somewhere that it shouldn’t be using a sensor, which, when it gets wet, lets someone know. Someone still has to go to the site, find the valve, and turn it off. Clearly, it’s better finding out on Friday night than Monday morning that you have a leak, but in the time, it takes for a human to respond, damage still occurs. That reduces risk but doesn’t prevent it.
Each one has its place, and risk managers, together with their Innovation and Technology departments, have some serious work to do to decide which risks are big enough to spend money on, and how much of it. Based on the size of the risk, and the cost of the technology, and the risk appetite of the organization, there is some serious calculus to do there.
If a firm starts with these considerations in mind, works to understand why a technology is valuable to them, and then looks at the value proposition to understand just how great that value may be, the decisions they make will be aligned to the risk tolerance and needs of the business.
I have been to a project in Texas where an AI drone-enabled inspection found an error in how the skin was being attached on the 15th floor, before the error could be propagated across whole 40+ story building.
Any examples of how innovative solutions have mitigated risks on projects?
I have been to a project in Texas where an AI drone-enabled inspection found an error in how the skin was being attached on the 15th floor, before the error could be propagated across whole 40+ story building. A human wasn’t going to catch that at that point, but tech did, and this saved literally millions of dollars in demolition, rework, materials, as well as many headaches and many tons of carbon.
This really demonstrates the fact that tech is great at looking at the work regularly, proactively, thoroughly, and in places where a human would have a really challenging time going.
Advice on Collaborations and Startup Scouting
How do you collaborate with construction firms or other parties to foster innovation?
We work closely with our clients. Our goal – where we want to be with our clients – is to be a partner, not just a payer of claims. We want to be proactive. That’s why our risk engineering, knowledge networks, and thought leadership are such major parts of our approach. Having a deep understanding of our clients’ risks allows us to find the best insurance and risk management solutions for them, for all their risks, not just the insurable ones. That’s the kind of partner we want to be.
In our Construction business, we have established the knowledge networks I mentioned to help foster innovation, collaboration, and knowledge sharing among professionals. These groups are made up of our construction industry clients. They provide a space for construction experts to exchange ideas, best practices, and new technologies to improve the industry. By connecting professionals and sharing insights, these networks contribute to the advancement of the construction sector.
We are currently tracking over 800 tech solutions. We’ve done a deep dive on over 270, and we are currently partnered with about 39.
What role do startups and external tech companies play in your innovation strategy?
We’re very engaged in finding meaningful risk management through external partners for our clients, which we do through the preferred partners network that I mentioned earlier. We work really hard to improve the signal-to-noise ratio in the space so our clients can focus on meaningful solutions, instead of just wading through the entire internet in search of them. We are currently tracking over 800 tech solutions. We’ve done a deep dive on over 270, and we are currently partnered with about 39. That’s a narrow funnel. By the time we feel comfortable enough to recommend a tech solution, we have reason to believe they are financially stable, mature enough, and offer real, useful solutions to our clients. Once we clear that bar, we go on to negotiate discounts and/or preferred termsfor AXA XL clients. We do all this because we believe that external partners are a valuable part of any well-rounded risk management strategy.
As for start-ups, we are definitely interested in knowing what’s coming next. We stay in contact, keep an overview of the market, and monitor them. We have good relationships with venture capitalists who bring us solutions all the time – sometimes we even get to collaborate on them; that’s fun. We are interested in knowing what may be possible, what’s in development, so that we are ready to move once the solution is mature enough.
Featured image by Clem Onojeghuo on Unsplash.
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