Driving insurance forward

For multinational insurance group AXA, the drive towards digitalisation reflects the transformation of the sector as customer behaviour and expectations change.

While, traditionally, agents played a key role in introducing products to customers, face-to-face interactions are giving way to digital ones, explains Jack Lo, head of tax for Asia.

‘Our agents would check the policy and provide the pricing, coverage and package proposal to customers. In the old days, agents could only provide these to customers after getting the feedback from the underwriting team. But nowadays, as long as the agents have an iPad or a cell phone, they can respond to customers' queries on the spot.'

International shift

The French-headquartered, multinational company, which also provides investment management and other financial services, is at the same time operating in a landscape where tax administrations around the world are transforming themselves to become more digitalised, including in Hong Kong, where Lo is based.

At the international level, the OECD/G20 Inclusive Framework on BEPS since 2016 has been spearheading an ambitious plan to reform international taxation rules and ensure that multinational enterprises pay a fair share of tax wherever they operate, with a focus on addressing tax challenges arising from the digitalisation of the economy. Many tax administrations have also realised the potential benefits of digitalisation and set off on their own digitalisation journeys in recent years.

Lo says that the digitalisation journey of tax administration has moved in three phases, which are referred by the OECD as Tax Administration 1.0, 2.0 and 3.0. While Digitalisation 1.0 refers to a world that relied mostly on paper, Digitalisation 2.0 involves progress towards the adoption of electronic forms, which bring more convenience.

Tax Administration 3.0 – which is still at an evolving stage, globally – means invoicing electronically and building a connected system with tax administrations to share data in real time.

The Covid-19 pandemic has resulted in the rapid acceleration of the digitalisation of tax administration, Lo says, noting that the Chinese mainland has been implementing a new phase of its Golden Tax System, which is known for its capabilities to manage taxpayers’ VAT compliance electronically. The new phase would involve the adoption of fully-digitalised e-fapiao (official receipts) and a national e-invoicing service platform.

‘As the implementation moves ahead, IT, tax and finance teams need to collaborate with a view to re-engineering and upgrading the system,’ says Lo. ‘The change is not just one about catering for tax requirements, but also reexamining process flow and internal control. It is a multidisciplinary exercise that brings together good brains from different functions to build the overall solution.’

Power of Big Data

Technologies such as Big Data and artificial intelligence (AI) are also becoming essential to the operations of organisations like AXA. One example Lo cites is AXA’s app, Emma by AXA, which uses advanced technologies to offer its customers a better user experience, while supporting their holistic wellbeing across their life journey.

‘AXA does not want to just pay customers’ claims; we want to be a partner that cares for their health and wellbeing. Emma is an all-in-one digital concierge, which covers many aspects that a customer needs, from booking a tele-consultation with a doctor to making an insurance claim, and caring for one's physical and mind health,’ he says.

Weather watchers

AXA is not just using digitalisation to support customers; it has also developed another platform that taps into the power of Big Data to detect fraudulent claims and therefore protect revenue. It analyses big data in weather forecasts in its parametric/weather insurance – a cutting-edge offering which serves customers better with more certainty on claim circumstances and faster payouts.

‘For example, when a flood or drought happens and reaches certain agreed parameters, the company will automatically pay out to customers with no need to provide proof of loss. This has hugely reduced the claim processing time and efforts and translated into strong support, both financially and mentally, to customers at a time when they need it most,’ says Lo, adding that climate change is making this increasingly important.

The company set up a central strategic development office; one of its scopes is to promote digitalisation. At the same time, AXA is constantly working to keep up with ever-changing cybersecurity threats and other changes in the world.

'Tax Administration 3.0 will prove to be not just another transformation with higher speeds, but a real paradigm shift, in the sense that the entire accounting and tax ecosystem will be reshaped. With connected systems and real-time data, taxpayers will be facing issues like almost full tax transparency and automatic or close to real-time audit,' says Lo.

He adds that accounting professionals should equip themselves with a proactive mindset, strong analytical skills and strategic thinking to deal with the challenges posed by a digitalised tax administration. 'Tax professionals will need to think and act ahead. These attributes are deeply-rooted in accountants from their early training.'