"Insurance innovation" is often treated as an oxymoron, but it can't be. Innovation in the world writ large doesn't happen unless someone takes on the risk from a new technology or business model, and we all see new technologies and related business models flooding the market. Someone in the world of insurance and risk management has been doing something right.
Yet we still see a lot of puzzlement about how to sort through all the technologies that are suddenly becoming available to insurers as they try to innovate. The insurtech movement has moved through the first phase: We all know it's real. But what to do about the next phase, the get-an-actual-new-product-or-service-or-business-model-into-the-market phase?
Companies are trying all kinds of things: innovation scouts, hackathons, sprints, "innovation tourism," including memberships at Plug and Play, etc. But there isn't a lot to show yet for all the effort by insurers.
To see what companies are doing with innovation efforts and to help highlight what is actually working, we undertook a major research effort with our friends at The Institutes and supplemented that with nearly 1,100 hours of interviews with insurance executives working in innovation. Guy Fraker, our chief innovation officer, lays out some initial results in the first part of a three-part series, available here.
Two points stand out to me (though please read the whole piece, because there's a lot more there).
First, companies are tackling innovation in too piecemeal a fashion, mapped to the current structure, and need to coordinate across silos to be effective. Company structure is optimized to address questions that have already been answered, but innovation is about posing and answering new questions. The current structure can actually work against the innovation efforts, which are usually best done by a small, goal-oriented team that pays little attention to silos.
Second, a high percentage of executives said that their IT infrastructure limits their ability to innovate, but that's rarely true. There are, in fact, ways to innovate alongside a modernizing of the IT operation. Limitations can even make an innovation effort more focused and fruitful.
Guy, having laid out an overview of the research in this first article, will get into more of the how-tos in the coming weeks. The good news is that innovation efforts, organized properly, can actually start smaller than you think -- and, no, you don't have to shell out big bucks for a membership at Plug and Play. And when you've succeeded once, you create momentum so that innovation efforts can build on themselves.
Have a great week.