Global financial services giant AXA sees its technology as a game-changer as it is attempting to build momentum behind the launch of its U.S. employee benefit business for the first time. Through subsidiaries AXA Equitable Life Insurance Company and MONY Life Insurance Company of America, AXA will launch a suite of products — group life insurance, dental and vision, short- and long-term disability, gap medical and hospital indemnity, and critical illness — in the fall.
In this exclusive interview, the AXA U.S. executives behind the launch —Herve Balzano, head of employee benefits; James Long, head of distribution; Tom Flavin, senior vice president of sales; and Ed Velazquez, chief of staff and head of administration, talk about how the company's view of the technology ecosystem around the benefits business informed its business objectives.
Why enter this space now; how are you going to compete?
Ed Velazquez: There’s clearly a lot of disruption in the market, and there’s going to certainly be more disruption in the market whatever the Supreme Court decides with respect to the ACA. But I think for a company like AXA, we’re probably even more uniquely positioned than our competitors to be able to be nimble and be flexible in response to that, principally because we do not have any legacy systems — whether that’s technology, whether that’s distribution — to hold us back.
We started with a high-level strategy, and we said how can we think about a game plan to step foot into the market the way it currently exists and then expand the footprint into the way we think the market’s gonna be three to five years from now? We certainly don’t have a crystal ball, but we can tell that there’s going to be continued focus and pressure on employers in terms of providing for their employees and utilizing employee benefits as retention tools. That is critical for employers in the SME space, and we think that AXA will be able to give that value proposition to them, recognizing the impact of health care and the importance of employee benefit products.
Herve Balzano: AXA is a big company worldwide and we have operations with employee benefits in many countries. It’s a large book of business; roughly from $12 to $15 billion We are clearly the leader in France, in the U.K., in Hong Kong where we are No.1 for employee benefits as well — so, many countries. To start the operation in the U.S. is the way to really prove that AXA is not only an employee benefits provider in Europe and Asia, but now in the U.S. as well. This is the biggest market in the world. So that makes a lot of sense.
Even if it’s a competitive market, we have identified that there is room for us. Especially from 20 to 500 employees, the market for ancillary benefits [is] underserved or fragmented in terms of competitors. I think this is a real reason to enter this market.
When you say there’s no legacy in the systems, could you expand on that?
Velazquez: So many entrenched competitors, they’re insurance carriers, they’ve been insurance carriers for decades, so they have generations-old technology that they have been building on and building on, and they’ve been held together by Band-Aids. In certain respects, our company is no different. We’ve tried to take a very different view of technology generally with respect to this particular endeavor. In the employee benefits space, we are taking a totally holistic view of technology, and since we don’t have to worry about feeding a legacy system or systems from 25 years ago, we can work to [be] best in class.
Balzano: Usually when we think about the system, it’s about back office. But in employee benefits we are convinced that where we can differentiate is for the front end. And so we would invest in technology to differentiate on this way. Especially for our three customers: the distributors, the employers and the employees. Not only in one area, but we will build a 360 platform.
Tom Flavin: It’s no secret that every employee benefits company out there wants to make lives easier for the brokers and users as well as employers. However, there are some restrictions to try to make their lives easier. Even though they may think they may have the solution in their head, will the systems plug-and-play to allow for those solutions? Not having these legacy systems that Ed spoke of definitely gives us the opportunity to bring those systems to those brokers and users, as well as employers, using the best technology in the whole picture. Not just a piece of the puzzle. It’s the whole picture. So it’s starting from the RFP process through the enrollment process through the administration to the program ongoing as well.
What is it about the technology that makes it different?
James Long: Brokers and GAs typically own a large block of this business. What they use for a vocation tool, how do you make their lives easier, faster, more responsive? That is one thing. Employees at the tail end, when they have open enrollment, how do they make decisions that benefit their families, are they fully informed, is it easier? And the employer, how do they feel confident that they’ve got the right approach for their employees and done in an economical way and being fully compliant with ACA? So all those problems from front to backend is what we’re trying to solve.
Flavin: [The ACA] opened the door and opened the minds for all parties in terms of it’s not business as usual. The marketplace is changing. And with that, everyone has to adapt to those changes in the marketplace. And by embracing technology what we’re hoping to do is to, from a broker perspective, really help them protect their block of business. One of the more frustrating experiences from a broker perspective is to go to a client and bring a program to them that drastically failed during the enrollment process for numerous different reasons. And then they’re gun-shy to [bring] that type of product to the next client, to the next client, to the next client.
What does the platform look like?
Long: It’s not an exchange, it’s not an app; it’s a platform. We call it Benefits 360. You get a total view of how it impacts your family, how you make the choice. Right now it’s a disjointed process. [Employees] struggle through and they get it over with, and they make decisions which they have no idea could impact their own savings account. Changing the verbiage around the product and also applying context to how it impacts people’s lives we think will have a big impact.
Velazquez: Consumers like the full picture. We’re trying to figure out how much do people like to go through a process where they say, Here’s my salary; here’s how much I think I’m gonna spend on health care; here’s what I have left.’ Some consumers want to go through that kind of model. Some want to go through just three clicks.
What are you hearing from brokers directly?
Long: We’ve gone out to the market and asked, If you started with a clean slate, what would it look like? What are our competitors doing; why do/don’t you like it?’
The legacy distribution point that we have and we’re very proud is AXA Advisors, approximately 5,000 financial professionals largely focused on small business owners throughout the United States — some extremely successful at what they do. A large number of them specialize in benefits, and we’ve treated them to special focus groups. We have an advisory panel about 15 of them. They’re part of our tier-one broker launch approach and they’re extremely excited about our reentry into the business. They’re focused on making it successful, and we’re excited to work with them. So that’s a legacy distribution source that we value.
So how does the emergence of this new entity affect MAXIS? Is AXA getting out of that joint venture with MetLife?
Balzano: If you look at France, AXA is a huge leader, especially in employee benefits. MetLife is there as well, but not in the same market. It’s exactly the same in the U.S., with respect to MetLife, that’s much more than a strong partnership. It’s now a joint venture and a very successful operation. But it’s all about jumbo cases, large corporate, and they will stay the carrier for jumbo cases in the U.S. So there’s no intention to enter this market.
What’s going to be in the eight different product lines that you’re going to be offering?
Balzano: The way we want to do that is really to be not only a niche carrier in ancillary benefits, but to provide a full range of products. We will be able to provide employer-paid and voluntary benefits, and if we are successful, and I hope we’ll be, we will accelerate the growth, building new products, or maybe try to set up some partnerships with medical carriers. We don’t sell medical, so it would make sense to bring some offer and to collaborate on that.
Have you set short-term milestones, long-term milestones?
Balzano: We have a plan until 2020. Potential acquisitions could be something we’re considering, but we have a real plan to really test the water and to be confident with the market. Then we’ll accelerate, extend the range of products.
Velazquez: As you enter the market, you learn what the market wants, you tweak your design, you go out, you refine the market approach, you refine the product approach. And so we built that into the longer-term 2020 plan that Herve says because, again, it’s a learn-and-share culture at AXA. So we want to go out and figure out what customers want, whether it’s a broker or a GA, whether it’s a strategic partner.
If AXA enters a market and decides it’s gonna go take over a company, it does so in its very disciplined, methodical way, and it’s doing the same thing here. The thing that we don’t hesitate to do is say we don’t know everything — and we don’t — so we continue to learn what the market says.
Are you looking to make a splash with the products?
Long: Do you think products and features are going to be the differentiator? I don’t see it. It’s almost like table stakes. Delivery systems, messaging, platform, I think that’s going to be the difference. We know that you have to be price competitive, you have to have products and services and the features that people want. We’ve looked at that and built it from that basis. If there’s a feature on CI that’ll increase enrollment from 12% to 30%, I’d love to see it. I don’t think it’s there.
Velazquez: There’s going to be flexibility that is going into all of these products because we’re filing them for the first time. That’s just a basic point. We can run across a white board 12 competitors and say, What do people have? What don’t people have? What seems to make sense, and what doesn’t?’ A lot of excessive benefit triggers, for example in the CI products, consumers don’t like them, brokers don’t like to explain it. It’s a frustrating experience for the employer. So let’s make ours a little bit simple. Is that a plan design that’s gonna set the world on fire? No. Is it flexible enough to be able to meet what the market needs now? Yep.
What’s the strategy to try to get a little momentum behind the organic growth?
Balzano: First, we are very modest, but in the same way, we are AXA. So we can leverage the knowledge and the relationships we have with brokers and distributors everywhere. The technology we have already built in different areas in Europe or in Asia we have that in mind.
How many people do you have in the organization?
Balzano: Twenty-five currently. We continue to hire people. I have now my core team in place, chief of staff, head of sales, head of technology and operation, head of underwriting and product. So everybody is starting to grow their team, and we are all working together with the same vision. End of the year we should be at 50. But of course we can leverage all the support within AXA U.S. in IT, finance, HR. We don’t have to build from scratch in the new market. We are already an established company.
Velazquez: Getting to scale, it requires commitment, and we certainly have the commitment from AXA. We certainly have the commitment here from our board, from our executive team. Everybody is fully aligned, which is a great opportunity for us because the high-level strategy was developed, it was vetted, and now it’s all about execution. It’s going out into the market over the coming months and getting it done.
Do you have a vision for how to keep employees and employers engaged all year?
Long: We haven't contemplated connecting to an HRIS system because that’s an extra level of complication we probably don’t need in our launch. But, yeah, open enrollment should be not just two weeks one point in the year. It should be a longer period of time to make choices in benefits and other things. So that’s high on our list. We’re doing consumer research now, just embarking upon it.
Velazquez: You sort of wonder whether employers actually truly understand what their employees want and how they want it. So, the ability to stay actively engaged with the carrier that provides disability, how important is that? It’s important when you’ve got a claim. And so it’s thinking about the claim experience and what that actually means and how that gets started and how it gets processed. That sounds so simple, but part of the engagement is recognizing when do people really want to get engaged?
Where do you think the big challenges are for you moving ahead?
Balzano: There’s the competition, of course but they are struggling. I talked with a president of a big company last week, and he said they are struggling with seven different systems. They grew through acquisition and they never were unified in one platform. So it’s tough for them.
Then I would say we have to be patient, that we have to test the water, to do that in a selective way. The product is good and we offer a broader solution than what you can get usually in the market as a distributor. It should resonate.
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