Cheri Hanes has spent over a decade helping AXA XL’s construction clients navigate emerging risk, from subcontractor default insurance through leading the company’s construction innovation and sustainability work. Today, she serves as VP, Head of Construction Innovation and Sustainability, where she leads AXA XL’s Tech Adoption Maturity Index and works closely with the risk engineering team to vet and recommend technology to clients. We sat down with her to talk about why mass timber projects are shifting insurers’ attention toward water risk, what it takes for a construction technology to actually stick with field teams, and how real-time monitoring data is starting to reshape how risk gets priced.
Career Journey
You started your career in construction, first with your own small construction company, then you made the move to commercial construction with Bovis Lend Lease and Yates Construction, managing sustainability efforts on the builder side. What drew you from the construction side of the table to the insurance side, and what did you understand about construction risk from that experience that you couldn’t have learned elsewhere?
I never saw the shift from construction to insurance coming, honestly, until the opportunity was presented to me. I love construction, and have worn many hats there, from Operations to Preconstruction to Sustainability, and I certainly expected that construction would be it for me for my whole career. What I didn’t understand before joining AXA XL was what working in the insurance space could accomplish for the construction industry.
I still think of myself as a construction person, and probably always will. I learned so much in those roles. The small firm I was a partner in taught me just how much grit and determination this work takes when things start sliding, and commercial construction taught me a whole other level of complexity and the reality of bringing a sophisticated owner’s vision to life, within the constraints of budget, time, and safety. That’s a viewpoint I could not have gained in any other way than being in the daily flow of the work. It’s very specific.
Working in construction insurance provides both a broader view and a larger audience. Here at AXA XL, I can work with our clients – all of them – to provide perspective and lessons learned they can use to avoid risks and solve their challenges with the benefit of all our claims teams and risk engineering teams see, which is a lot! Warren Buffett famously said “It’s good to learn from your mistakes. It’s better to learn from other people’s mistakes.” And I totally agree! That wider perspective is hard to get from within one construction company, and I find facilitating that kind of knowledge exchange very satisfying.
You’ve been at AXA XL for over 14 years, moving from construction risk engineering through subcontractor default insurance into leading innovation and sustainability. How did those different roles connect for you, and what did each one add to how you think about risk?
As a risk engineer in SDI, and later the leader of that team, I gained much more knowledge of the differences between construction companies, and the similarities. All builders work within the same constraints of time, budget, and owner satisfaction, but they do this with as many different approaches as there are construction companies. That opened my eyes to the many ways construction companies can successfully take on and manage risk.
It also gave me a firm foundation to help our clients make the leaps that the industry is requiring. As the Head of Construction Innovation and Sustainability, I focus on helping construction companies do new things well, while managing their risks, and keeping within the bounds of those constraints. Because of my history, I can see where the lines are firm, and where there might be freedom to test and try. So, whether a client is adopting new technology, building with alternative materials, or implementing sustainable building practices, I want to provide valuable perspective. And I think my experiences all led me to the ability to do that.
Your credentials span construction risk (CRIS), environmental risk (ERIS), and LEED accreditation. For someone with deep roots in sustainability, what’s it like to be doing that work from inside an insurance company?
That main connection to sustainability that I enjoy is fully rooted in risk, and it’s a huge playing field. If you think about it, all types of risk have a sustainability footprint. For example, if there is a water incident on a project in progress, installed materials may need to be pulled out and replaced. That more than doubles the carbon footprint of that work; not only will the material have to be procured and installed twice, but a lot of energy of all sorts will be spent making it right. What might seem like a QA/QC issue has lots to do with sustainability, even though that’s not what you might first think of. I enjoy thinking and talking about those connections and feel that everything we do to help the industry has a sustainability impact.
Not to say that we don’t address sustainability directly. We definitely do. Between our Sustainability Circle peer network and the important projects we take on there, and our sustainable building practice benchmarking service, which we call the SAMI benchmark, we make direct impacts on the sustainability practices of our clients. It’s very fulfilling, and I am grateful for the vision and support from AXA XL that allows me to make such meaningful impacts. I never imagined that I would be able to have such industry-wide impact.
Perspective on Water Risk and Technology Adoption
You’ve written extensively about construction tech adoption, and you’ve tracked it closely through AXA XL’s Tech Adoption Maturity Index since 2020. What has changed most in how construction companies approach technology decisions over that period?
It’s been quite a journey! Pre-2020, the challenge was that there wasn’t as much tech in construction as we really needed, but that has changed immensely. Now there is so much tech that it’s hard to even know where to start looking. And I believe some firms may have gotten carried away with all the tech they have piloted and purchased a little.
Now there seems to be an effort to re-focus, to assess, to understand the capabilities within each product in their tech stack and optimize the right techs, maybe shed a few that are really niche, and get as much as possible from each one they keep. It’s a good place to be, and shows maturity in the industry’s use of tech.
And I can’t let this question pass without talking about AI. It’s everywhere, and I think we will see a similar curve with AI. We will no doubt see lots of enthusiasm, testing and trying, but ultimately, I believe it will become clear where it works for this industry. We need AI; the labor crisis is real, so we must find ways to optimize the work. AI shows us a way to do that. My hope is that ultimately it gets the field teams out of doing manual entry, searching for things, and other “grunt work” and lets them exercise their true human talents – their art and expertise – more of the time.
Technology adoption in construction has historically stalled not because the tools don’t work, but because of how they land in the hands of people already managing demanding schedules. What does it actually take to build a technology product that field teams will use consistently, and where do vendors most often get that wrong?
Great question, and an important one. Technologies need to fit the workflow of construction seamlessly. They cannot add layers of complexity, additional log ins, or a bunch of additional clicks to project teams’ days. Those teams don’t have the bandwidth for it. A new tech, to be successfully implemented, needs to clearly make their lives better, not worse. There’s an educational component there as well, and not just how to use the system. The project teams need to understand how and why this new tech will make their project more successful. Project people are very pragmatic and very busy, and if they don’t know WHY the tech was added, that tech will just languish.
Sustainability and the Construction Industry
You’ve argued for years that the construction industry already does far more sustainability-related work than it gets credit for, and that the bigger challenge is documentation and reframing. Where does water fit in that story, and why do you think it tends to get overlooked in the broader sustainability picture?
Water management is just part of construction; all construction companies do it, and don’t get much credit for it. Only when something goes wrong does water get much attention beyond the immediate project team.
I think one reason it’s hard to recognize excellent water stewardship and management is that the approach and the challenges in managing water vary greatly by region. While there are regulations and initiatives like Salmon Safe which evaluate land management practices to protect water quality, maintain watershed health, and restore habitats, there is not a one size fits all answer for managing water on a construction site, nor could there be. In one location, all water may be trucked in, in another, direct connection to the municipal water supply is possible, in some places it’s easier to bring in non-potable water as needed, or meter water usage, etc. It’s a broad spectrum, and the answers that make sense for each are different, so there is not a consistent method to judge what good looks like.
Water technology has a role to play here in metering, in leak prevention, because obviously that saves water, and in the carbon case as I mentioned earlier.
You’ve written extensively about mass timber and are an active member of the Mass Timber Insurance Advisory Group. Mass timber is growing fast, with thousands of projects underway, and the insurance industry has been working to keep pace with that growth. What has the industry learned about underwriting mass timber projects that it didn’t know five years ago, and where has the risk picture become clearer?
Mass timber continues to fascinate me, and I truly believe in it as an important structural building material that provides a meaningful carbon reduction. However, it does present a particular challenge to insurers, in that we don’t have sufficient historical performance information (aka actuarial data) to confidently feel we are getting the risk right. That said, we are working to build our knowledge and confidence so that we can support it for the long term.
We’ve already done a lot to demonstrate our support. AXA XL was first in the market with a specific mass timber risk class, and to date we have insured about 70 projects with a value of over $8.6 billion. AXA XL Construction Risk Engineering brings real field experience to this work. We’ve seen what works, what doesn’t, and we are committed to sharing that with the construction industry. We understand the risks and we can help clients turn those observations into practical mitigation plans.
Because of all that, AXA XL now has a history of supporting mass timber claims successfully. What we’ve learned there is that, while fire is naturally the first risk we think of when we talk about insuring wood of any sort, with mass timber, water damage is a more prevalent risk. How water of all sorts gets managed on these projects is a focus area for us. And that includes management of environmental sources of water, materials storage, building water management, and technologies like Wint that help teams know when there is an unexpected flow to address before it becomes a huge issue.
A lot of your published work returns to a central idea: that the construction industry needs to look at technology across all the workstreams it can support, not just the primary use case it was purchased for. How do you apply that thinking specifically to water risk and mitigation technology?
That’s a good point; I think water management technology usually gets thought of as construction QA/QC. But there’s much more, and we’ve hit on a few of these ideas so far: water management is incredibly important for preventing rework, schedule preservation, short- and long-term indoor air quality, the longevity of the building itself, sustainability, and conservation. If builders can think more broadly about all water management tech can do for them, and later for the building owner, the use case becomes even more compelling. If they educate the owners they work for about all of these benefits, it also becomes easier to get those owners excited about adopting a system that will stay with the building long-term, and that makes it clearer that a water leak prevention tech is a real investment for them, with many important potential returns.
The Insurance and Technology Relationship
The insurance industry has long priced risk based on historical loss data, but real-time monitoring technology is starting to generate a much richer operational picture of what’s actually happening on a project. How do you see that changing the relationship between what a construction company can demonstrate about their risk management and what they pay for coverage?
We as an industry always get caught up on ‘price’ when discussing technology, as it’s an easy way to justify ROI, however sometimes the conversation is just as much about differentiating yourself as a client from your peers and unlocking insurers’ capacity and capabilities as a result. During the last hard market cycle, for example, one important issue was the significant increase in water damage frequency and severity in high-rise residential projects. At that point, for quite a few markets, it wasn’t about price or deductibles as we saw they were both being outpaced by losses. There were several instances where, if a project didn’t use water flow tech, the placement wasn’t getting done at all. When the market shifted, this obviously loosened a bit, but we still see some mega high-rises where water flow tech will be required to get the placement done. Even if there is no direct ROI on a single project, the clients who invest in risk management are always getting the best terms relative to their peers.
It’s also important to understand that our construction risk engineers have always paid close attention to risk management in whatever form it takes; that is not new. Their work is important in not just helping our clients identify and address challenges, but also in correctly pricing risk. The better our clients are at utilizing risk reducing tech, the better their risk is, which translates into pricing. It’s not obvious, because it happens behind the scenes, but it’s an important part of how we view our clients’ risk management practices.
I would also encourage any developer, owner, or general contractor looking at a technology investment to consider that most events don’t turn into claims. Most are handled in-house because the damage falls below their deductibles. But those smaller events add up, and all that money comes straight off their bottom line. The potential return to them from preventing these smaller events has an immediacy that can’t be overlooked. So, in addition to improving insurance access and pricing, if builders select techs that really reduce risk, they are going to reap some very direct benefits.
AXA XL’s risk engineering team sits at the intersection of what clients are doing operationally and what the insurance products need to reflect. How do you see that team’s role evolving as more of the risk picture gets captured by sensors and real-time monitoring?
The role of construction risk engineering is so important, and their services make our clients better every day. Part of that effort involves their assessment of the technology needs and gaps our clients have, and making recommendations for technologies we believe in.
Construction risk engineers also spend time with our clients to understand how technology is being used in the field, including what is working, where teams are seeing challenges, and what lessons can be shared. They do this through project site visits, stewardship meetings, and benchmarking services, especially our Tech Adoption Maturity Index (the TAMI), which is a deep dive on a construction company’s tech adoption and implementation. We use that process to help our clients visualize how they stack up against the industry and their peers, then my team partners with construction risk engineering to make relevant tech recommendations specific to their businesses. We take our recommendations very seriously, and my team supports risk engineering by vetting techs that we think could be truly meaningful to our clients. We have a massive catalog of over 1,000 techs we’re tracking; we’ve done a deep dive on over 300 and have partnered with just a handful. It’s a very narrow funnel, but by the time we partner with a tech, our confidence in their product and their team is very high.
In the future, we’d love to see more data sharing from industry so we can see a fuller picture of the actual risks impacted by technology, instead of just those that turn into claims or notices of potential claims. I think that would be meaningful in making risk engineering recommendations even more laser-focused, and in continuing to more accurately assess those risks. That would be a real win-win scenario.
