Sponsored: AXA Insurance Company

Facilitating Entry for Foreign Firms

The U.S. market offers growth opportunity for firms seeking expansion.
By: | February 20, 2018 • 5 min read

When it comes to successfully expanding a business into a new market, two critical factors usually stand out above a myriad of challenges: Opportunity and timing.

The U.S. marketplace has long represented great opportunity for global businesses. According to the Organization for International Investment, the United States was the world’s top target for foreign direct investment in 2016, attracting $3.7 trillion — and much of that attention was focused on the middle market. According to the National Center for the Middle Market, this U.S. segment reported a 7.6 percent revenue growth in the fourth quarter of 2017 over the previous year and represents the third-largest global economy.

As for timing, a confluence of factors could make 2018 a year rich with opportunity for international firms to enter the U.S. market. The economy remains on a steady upward trajectory as unemployment continues to fall, and recent tax and regulatory reform could potentially foster domestic manufacturing and global trade. In addition, chambers of commerce are actively seeking to pull in international firms with a variety of incentives and services.

“The year ahead will offer a lot of growth opportunity for international companies looking to gain their foothold in the U.S.,” said Dawn Miller, CEO, AXA Insurance Company.

But for all the potential the U.S. market represents to an international firm, successful entry is not simple or easy. Companies need expertise to navigate the operational, commercial, regulatory and financial challenges to a successful U.S. launch.

Managing Commercial, Regulatory and Insurance Risk

Dawn Miller, CEO, AXA Insurance Company

Once strategic decisions are made related to how best to expand into the U.S., whether through acquisition or organic growth, a host of additional challenges remain.

For one, a web of federal, state and local regulations awaits businesses crossing the border. Deciphering jurisdictional differences in tax codes and employment law; determining duty of care obligations; properly valuing physical assets —these are just some of the key commercial risks presented by any international expansion.

“How do you employ your workers abroad and keep them safe? Do you know the proper accounting and financial reporting methods in the U.S.? Where do your liabilities begin and end with contractors? The due diligence work is significant to ensure compliance,” Miller said.

Inbound companies also have insurance-specific hurdles to contend with, including critical differences in contract vernacular. Definitions of admitted verses non-admitted may vary in the U.S. from a European market. Self-insured retentions and deductibles may offer different advantages and disadvantages. Business interruption versus “loss of use” may not be clearly delineated.

No multinational company can assume that their domestic policies work the same way in another country, or will cover operations outside of the issuing jurisdiction. It comes down not just to intricacies of policy wording, but also to coverage limits required by law.

“There are different risk transfer mechanisms from market to market,” Miller said. “Not having a firm grasp on those variances can leave incoming companies either under-insured or with unnecessary coverage overlaps.”

But for new entrants to the U.S. market, getting a handle on both the commercial risks and insurance discrepancies is a mammoth demand on resources — especially for mid-size companies that run lean. As a result, insurance and risk management often get lumped together and sometimes fall to the bottom of the due diligence checklist.

While getting coverage in place quickly can check the “insurance” box, it misses a valuable opportunity to leverage the risk expertise of domestic carriers to tackle broader business risks as well.

Facilitating a Soft Landing for Inbound Business

“There’s a stronger role that risk management and insurance can play to allay the challenges and fears of foreign companies entering the U.S.,” Miller said. “The right insurer will bring transparency to an experience that can feel very opaque and help to create a soft landing.”

U.S.-based insurers who are proactive about getting risk management resources in front of companies can help international entities navigate both commercial and insurance-related risks.

AXA Insurance Company acts as a true partner in risk management by leveraging the resources of its U.S.-based teams as well as AXA Group’s global network.

“Our in-house claims and underwriting teams are dedicated to facilitating entry for companies coming into the U.S. market, and they’ve been doing it for 40 years,” Miller said.

AXA’s underwriters also come with expertise in property, marine, aviation and liability coverages. With more than 200 years of collective experience, they’ve developed a deep understanding of the needs specific to those companies transitioning to the U.S. market. The manufacturing, technology, and food and fashion industries are currently the top candidates looking to expand to the U.S. mid-market sector.

“Everything that we do is industry-focused. We have the technology, the data, and the breadth of AXA Group’s research capabilities to follow our clients’ industries on a granular level.”

Solutions + Services: The Whole Package

At the end of the day, the carriers that provide the best service for a company’s most important assets will build the long-lasting relationships that support continued growth.

“Insurance is only one piece of the puzzle,” Miller said. “We partner with all of the necessary third parties to create a comprehensive, one-stop-shop risk management solution.”

It does this in part by calling on its partners AXA Matrix and AXA Assistance.

AXA Matrix is a risk engineering firm that can help foreign companies strengthen and protect physical assets like properties and supply chains. AXA Assistance, a travel assistance provider, helps companies protect their most vital resource — their people.

“European countries have a duty of care for their employees working abroad,” Miller said. “Let’s make sure you have those protections here in the U.S. so you can honor those responsibilities.”

Both AXA Matrix and AXA Assistance are U.S.-based, so they can provide on-the-ground support.

“That domestic network of support is what helps companies not only start their business here, but grow their business here,” Miller said.

To learn more About AXA Insurance Company, visit http://axainsurancecompany.com/AboutUs.aspx.

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This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with AXA Insurance Company. The editorial staff of Risk & Insurance had no role in its preparation.




AXA XL, the property & casualty and specialty risk division of AXA, provides insurance and risk management products and services for mid-sized companies through to large multinationals, and reinsurance solutions to insurance companies globally. We partner with those who move the world forward. To learn more, visit www.axaxl.com.

Insurtech

Kiss Your Annual Renewal Goodbye; On-Demand Insurance Challenges the Traditional Policy

Gig workers' unique insurance needs drive delivery of on-demand coverage.
By: | September 14, 2018 • 6 min read

The gig economy is growing. Nearly six million Americans, or 3.8 percent of the U.S. workforce, now have “contingent” work arrangements, with a further 10.6 million in categories such as independent contractors, on-call workers or temporary help agency staff and for-contract firms, often with well-known names such as Uber, Lyft and Airbnb.

Scott Walchek, founding chairman and CEO, Trōv

The number of Americans owning a drone is also increasing — one recent survey suggested as much as one in 12 of the population — sparking vigorous debate on how regulation should apply to where and when the devices operate.

Add to this other 21st century societal changes, such as consumers’ appetite for other electronic gadgets and the advent of autonomous vehicles. It’s clear that the cover offered by the annually renewable traditional insurance policy is often not fit for purpose. Helped by the sophistication of insurance technology, the response has been an expanding range of ‘on-demand’ covers.

The term ‘on-demand’ is open to various interpretations. For Scott Walchek, founding chairman and CEO of pioneering on-demand insurance platform Trōv, it’s about “giving people agency over the items they own and enabling them to turn on insurance cover whenever they want for whatever they want — often for just a single item.”

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“On-demand represents a whole new behavior and attitude towards insurance, which for years has very much been a case of ‘get it and forget it,’ ” said Walchek.

Trōv’s mobile app enables users to insure just a single item, such as a laptop, whenever they wish and to also select the period of cover required. When ready to buy insurance, they then snap a picture of the sales receipt or product code of the item they want covered.

Welcoming Trōv: A New On-Demand Arrival

While Walchek, who set up Trōv in 2012, stressed it’s a technology company and not an insurance company, it has attracted industry giants such as AXA and Munich Re as partners. Trōv began the U.S. roll-out of its on-demand personal property products this summer by launching in Arizona, having already established itself in Australia and the United Kingdom.

“Australia and the UK were great testing grounds, thanks to their single regulatory authorities,” said Walchek. “Trōv is already approved in 45 states, and we expect to complete the process in all by November.

“On-demand products have a particular appeal to millennials who love the idea of having control via their smart devices and have embraced the concept of an unbundling of experiences: 75 percent of our users are in the 18 to 35 age group.” – Scott Walchek, founding chairman and CEO, Trōv

“On-demand products have a particular appeal to millennials who love the idea of having control via their smart devices and have embraced the concept of an unbundling of experiences: 75 percent of our users are in the 18 to 35 age group,” he added.

“But a mass of tectonic societal shifts is also impacting older generations — on-demand cover fits the new ways in which they work, particularly the ‘untethered’ who aren’t always in the same workplace or using the same device. So we see on-demand going into societal lifestyle changes.”

Wooing Baby Boomers

In addition to its backing for Trōv, across the Atlantic, AXA has partnered with Insurtech start-up By Miles, launching a pay-as-you-go car insurance policy in the UK. The product is promoted as low-cost car insurance for drivers who travel no more than 140 miles per week, or 7,000 miles annually.

“Due to the growing need for these products, companies such as Marmalade — cover for learner drivers — and Cuvva — cover for part-time drivers — have also increased in popularity, and we expect to see more enter the market in the near future,” said AXA UK’s head of telematics, Katy Simpson.

Simpson confirmed that the new products’ initial appeal is to younger motorists, who are more regular users of new technology, while older drivers are warier about sharing too much personal information. However, she expects this to change as on-demand products become more prevalent.

“Looking at mileage-based insurance, such as By Miles specifically, it’s actually older generations who are most likely to save money, as the use of their vehicles tends to decline. Our job is therefore to not only create more customer-centric products but also highlight their benefits to everyone.”

Another Insurtech ready to partner with long-established names is New York-based Slice Labs, which in the UK is working with Legal & General to enter the homeshare insurance market, recently announcing that XL Catlin will use its insurance cloud services platform to create the world’s first on-demand cyber insurance solution.

“For our cyber product, we were looking for a partner on the fintech side, which dovetailed perfectly with what Slice was trying to do,” said John Coletti, head of XL Catlin’s cyber insurance team.

“The premise of selling cyber insurance to small businesses needs a platform such as that provided by Slice — we can get to customers in a discrete, seamless manner, and the partnership offers potential to open up other products.”

Slice Labs’ CEO Tim Attia added: “You can roll up on-demand cover in many different areas, ranging from contract workers to vacation rentals.

“The next leap forward will be provided by the new economy, which will create a range of new risks for on-demand insurance to respond to. McKinsey forecasts that by 2025, ecosystems will account for 30 percent of global premium revenue.

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“When you’re a start-up, you can innovate and question long-held assumptions, but you don’t have the scale that an insurer can provide,” said Attia. “Our platform works well in getting new products out to the market and is scalable.”

Slice Labs is now reviewing the emerging markets, which aren’t hampered by “old, outdated infrastructures,” and plans to test the water via a hackathon in southeast Asia.

Collaboration Vs Competition

Insurtech-insurer collaborations suggest that the industry noted the banking sector’s experience, which names the tech disruptors before deciding partnerships, made greater sense commercially.

“It’s an interesting correlation,” said Slice’s managing director for marketing, Emily Kosick.

“I believe the trend worth calling out is that the window for insurers to innovate is much shorter, thanks to the banking sector’s efforts to offer omni-channel banking, incorporating mobile devices and, more recently, intelligent assistants like Alexa for personal banking.

“Banks have bought into the value of these technology partnerships but had the benefit of consumer expectations changing slowly with them. This compares to insurers who are in an ever-increasing on-demand world where the risk is high for laggards to be left behind.”

As with fintechs in banking, Insurtechs initially focused on the retail segment, with 75 percent of business in personal lines and the remainder in the commercial segment.

“Banks have bought into the value of these technology partnerships but had the benefit of consumer expectations changing slowly with them. This compares to insurers who are in an ever-increasing on-demand world where the risk is high for laggards to be left behind.” — Emily Kosick, managing director, marketing, Slice

Those proportions may be set to change, with innovations such as digital commercial insurance brokerage Embroker’s recent launch of the first digital D&O liability insurance policy, designed for venture capital-backed tech start-ups and reinsured by Munich Re.

Embroker said coverage that formerly took weeks to obtain is now available instantly.

“We focus on three main issues in developing new digital business — what is the customer’s pain point, what is the expense ratio and does it lend itself to algorithmic underwriting?” said CEO Matt Miller. “Workers’ compensation is another obvious class of insurance that can benefit from this approach.”

Jason Griswold, co-founder and chief operating officer of Insurtech REIN, highlighted further opportunities: “I’d add a third category to personal and business lines and that’s business-to-business-to-consumer. It’s there we see the biggest opportunities for partnering with major ecosystems generating large numbers of insureds and also big volumes of data.”

For now, insurers are accommodating Insurtech disruption. Will that change?

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“Insurtechs have focused on products that regulators can understand easily and for which there is clear existing legislation, with consumer protection and insurer solvency the two issues of paramount importance,” noted Shawn Hanson, litigation partner at law firm Akin Gump.

“In time, we could see the disruptors partner with reinsurers rather than primary carriers. Another possibility is the likes of Amazon, Alphabet, Facebook and Apple, with their massive balance sheets, deciding to link up with a reinsurer,” he said.

“You can imagine one of them finding a good Insurtech and buying it, much as Amazon’s purchase of Whole Foods gave it entry into the retail sector.” &

Graham Buck is a UK-based writer and has contributed to Risk & Insurance® since 1998. He can be reached at riskletters.com.