AXA’s Plans For The U.S. Market
May 12, 2015 by Source Media, Inc
It’s not often a company finds itself in a market position where it has the flexibility and agility of a newcomer along with a storied history that provides name recognition and a solid base of existing expertise. Global financial services giant AXA is in this sweet spot as it enters the 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.
EBN talked strategy with the AXA U.S. executives behind the launch – Hervé 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 – including why AXA sees its technology as a game changer and how they’ll build momentum behind the launch.
Why enter this space now?
Hervé Balzano: AXA is a leader in employee benefits in many countries. It has 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. Now we’re starting operations in the U.S. This is the biggest market in the world. So it makes a lot of sense for us, even if it’s a competitive market. We have identified that there is room for us, especially in companies with 20 to 500 employees, where the market for ancillary benefits [is] underserved or fragmented in terms of competitors. I think this is a real reason to enter this market.
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 Affordable Care Act. 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 going to 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.
You say there’s no legacy in your systems. Can you explain 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 ourselves is at the front end. And so we would invest in technology to differentiate this way. Especially for our three customers: the distributors, the employers and the employees. 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 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 does the platform look like?
James 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 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.
How does the 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. MAXIS is a global benefits joint venture – and a very successful operation. But MAXIS targets large cases, large corporations, and it will keep its focus on large engagements.
What product lines are you going to be offering?
Balzano: We don’t want to be a niche carrier in ancillary benefits. We want 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 that growth, build new products, or maybe try to set up some partnerships with medical carriers. We don’t sell medical, so it would make sense to collaborate in that area.
Have you set long-term goals?
Balzano: We have a plan until 2020. … Potential acquisitions could besomething we’re considering. But we [want] to really test the water and to be confident with the market. Then we’ll accelerate and 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 whiteboard of 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? Yes.
What’s the strategy for gaining momentum in this market?
Balzano: We can leverage the knowledge and the relationships we have with brokers and distributors everywhere. We’ll use the technology we’ve already built in different areas in Europe and Asia.
How many people work for this division?
Balzano: Twenty-five currently. We continue to hire people. I now have my core team in place, chief of staff, head of sales, head of technology and operation, head of underwriting and product. And they are starting to grow their teams, and we are all working together with the same vision. By the 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 are your biggest challenges?
Balzano: There’s the competition, of course, but many are struggling. I talked with a president of a big company recently, and he said they grew through acquisition. They never unified on one platform. And now they are struggling with seven different systems. So it’s tough for them.
Then, I would say we have to be patient, that we have to test the water, and 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.
