Why insurer Axa is entering the retail e-commerce market
Digitisation in insurance is usually associated with digital policy documents – but Axa is using technology to take a lateral approach to the indemnity business
Axa PPP healthcare is looking to rewrite the rulebook. Earlier in September 2015, the insurer joined the ranks of e-commerce retailers such as Amazon and eBay with the launch of its MyActive+ retail platform, selling discounted health technology products and other wellbeing services quite divorced from its usual indemnity portfolio.
Many insurers have embarked on digital customer experience projects. Using business intelligence to improve their understanding of the customer, Axa PPP heathcare aims to create an entire platform for customers.
As customers evolve and become more diverse, providing a customer experience that meets the needs of key consumer segments is key, analyst Gartner noted in its Top 10 business trends impacting Life and P&C Insurers in 2015 paper.
Smart use of data is among the ways insurers are innovating. For instance, health insurer Bupa has tied a data strategy to the business strategy. "I wanted to think of the culture and vision of the organisation by creating an insight-driven world where information is democratised," Bupa IT director Tony Cassin-Scott, said at the Gartner Business Intelligence and Analytics Summit in March 2015. The company runs workshops to identify new data-driven business opportunities.
Writing on The Harvard Business Review blog, McKinsey consultants Tanguy Catlin, Pradip PatiathIdo Segev noted: "The ability to mine the digital data consumers leave behind on the internet, social media, driving apps and even health-monitoring wearables could help insurers to better target customers, price and underwrite policies more accurately, and manage claims more effectively."
You could get a much better result offering a little black dress as an incentive to lose weight
Gordon Henderson, Axa Healthcare
But such initiatives may not be radical enough to truly embrace new digital customer experiences. Apps, such as those developed using Apple's HealthKit for the Apple Watch, could power a cultural shift in the populaion, where people take greater responsibility for their health. And this is an area healthcare professionals and health insurers are keen to embrace.
Gordon Henderson, digital and innovation director at Axa PPP healthcare, said: "The big issue we face is people don’t see value in insurance." Most people only deal with insurers when it is time for renewal or when they need to make a claim. "When they buy your product, they feel they're not getting any value."
For Henderson, Axa PPP healthcare's online store represents a first step in a long process to fulfil and deliver goods and services to members and non-members.
From insurance to retail
But why is Axa attempting to break into a market dominated by giants like Amazon and eBay? What is the value of selling non-insurance products to customers?
The answer goes back to basic economics. At Axa PPP healthcare Henderson said 79% of the insurance premium is paid on doctors' bill. Helping customer to become healthier represents major saving in terms of medical bills.
"What if you could look at lifestyle to minimise risks and identify any problems up front. This is far cheaper for us than finding out about a condition at A&E and it is good for our customers," Henderson said. "Eighty percent of people are diagnosed with cancer in A&E. By then it is too late for the customer and too expensive for us."
Changing health insurance focus
He said Axa is moving away from being a "health payer" to evolving into a "health player". Its e-commerce platform ties into an overall change in the marketplace.
Henderson said: "People are taking more responsibility for their lives." Technology advances is helping people to stay informed about their health.
For instance, Henderson said: "You used to go to a doctor to take a pill and be gone. But the rise of wearable technology means you can build your own solution for your health. There is a new paradigm and it involves a lifestyle change where you reduce cholesterol yourself."
This is the rationale behind Axa’s MyActive+ website – to encourage Axa PPP healthcare customers to manage their wellbeing themselves. Henderson said: "We are the only business that can reward people for healthy behaviour. Strava [the fitness tracking app] or Facebook don’t make any money if their population is healthy."
The insurer's e-commerce site offers 6,000 health products and, according to Henderson, Axa will add thousands more in the future. It carries no physical stock risk, relying instead on fulfillment from approved suppliers, with whom it has negotiated preferential discounts for customers. The pricing is not set to compete with Amazon. Axa healthcare’s goal is about improving the health of the membership basis and bundling free health coaching with the products it sells.
Segmenting users
How the company will achieve this is through what Henderson describes as "attitudinal segmentation", which uses behavioural analysis to determine which products and incentives would most likely tempt an individual. While obesity is linked to a number of health conditions, he said: "Only 16% of the population will respond to a rational medical consultation," such as the warning a clinician may give to a patient on the need to lose weight or risk developing conditions such as diabetes or heart problems. But Henderson said the driver to change may be completely different. "You could get a much better result offering a little black dress as an incentive to lose weight."
A survey from Oxford Economics for CA Technologies found that businesses are investing heavily in software to create new business opportunities.
The MyActivePlus site uses the Magento e-commerce platform with a few bolt-ons to profile people on the fly, enabling Axa PPP healthcare to build its attitudinal segmentation model. The company is using six segments to profile people into certain groups, which determine the types of products they are offered.
IT challenges
In the insurance business, IT moves slowly and large-scale projects take years to deploy and need FCA regulation.
Henderson said: "Insurance companies love to build internal, multi-million pound programmes that take five to 10 years to develop." Recognising the need to move quickly, Henderson had to convince the business that the e-commerce site needed to be developed differently. He said Magento did 80% of what Axa PPP healthcare needed straight out of box. It is also instantly scalable. To avoid being hamstrung by the FCA regulatory framework that governs Axa, Henderson needed to build the e-commerce site completely separately. He chose Pier 1 to host the servers, RedBox Digital to develop the Magento-powered site and opted for a virtual supply chain, which meant Axa did not need to hold any physical stock.
Henderson said he regards MyActive+ as a platform to fulfil goods and services to members. From a digitisation perspective he said the insurer has a pipeline of developments. "We are looking at monitoring devices that will create points redeemable on MyActve+," Henderson added. Over time, he hopes to create autonomous social groups among the membership on MyActive+, where people with similar health and well-being motivations can share ideas.
