October 13, 2017
Innovation Maturing Into Major Impacts
Recent award winners include TAL, an Australian life insurer whose new product approach is tailored to the self-directed digital consumer.
Maturity in innovation means the innovative approaches taken by companies throughout the ecosystem are becoming more comprehensive and systematic. SMA has acquired a unique historical view of innovation in insurance through our annual SMA Innovation in Action Awards – and we have seen how it has changed over the six years of the program. Small-scale experimentation with a single emerging technology like drones has been replaced by building an entire product or division around advanced technologies like machine learning. Insurers are also taking concrete and proactive steps to establish an innovative culture within their organizations. This year’s award winners provide great examples of these shifts and show how innovation is becoming firmly established in insurance.
An excellent example is Liberty Mutual Insurance, the winner of a SMA Innovation in Action Award for company-wide innovation. They created a sustainable innovation model across the enterprise to successfully deliver transformational value to their operations and customers. Their innovative initiatives include developing a digital, direct-to-consumer insurance product aimed at skiers and snowboarders, multiple skills for Amazon Alexa that break new ground in how consumers interact with their insurance company, and a number of next-generation telematics programs.
See also: Innovation: ‘Where Do We Start?’
Liberty also implemented cutting-edge analytics and emerging technologies in support of their Liberty Mutual Benefits carrier, winning an award for innovation in a single initiative. Building the data structure from the ground up gave Liberty Mutual Benefits the opportunity to create a data-driven organization with a focus on speed to market and innovative thinking – in effect, an InsurTech within the larger Liberty Mutual structure. Liberty Mutual Benefits leverages the open-source analytics platform Hadoop, artificial intelligence, visual analytics, and machine learning to extract the greatest value from big data and store it in a data lake rather than a traditional data warehouse.
Innovation at Liberty is not only happening within their innovation division, Solaria Labs, but throughout their business, with various external partnerships as well as investments through their strategic venture arm (Liberty Mutual Strategic Investments). Liberty Mutual is demonstrating how innovation as an organizational value can both drive competitive advantage and create new solutions for customers in the digital age.
TAL, Australia’s largest life insurer, took their own approach with an innovation initiative. The first achievement of that program is a new breed of customizable life insurance, CoverBuilder, which won one of this year’s awards. TAL CoverBuilder allows consumers to build their own personalized life insurance policy by adding or removing blocks of coverage. Designed by consumers through interactive online processing and education, new policies can be written without the help of a financial advisor. They can see how each choice they make affects their premium and benefits, and educate themselves about their life insurance options at the same time. As a result, they both understand and value the coverage that they put in place.
TAL’s new product approach is tailored to the self-directed digital consumer. They found that these new customers valued customization rather than simplicity and were willing to learn about many coverage options in order to personalize their coverage. TAL’s nimble pivot allowed them to better serve these customers. They furthered their offering by partnering with Qantas for early rollout, marrying their life insurance expertise to next-generation business models such as wellness programs.
Grange Insurance created an internal practice to institutionalize innovation through cultural change, regular events, and multiple channels. Their formal innovation practice elicits active participation across the enterprise, using an ideation platform for crowdsourcing innovative ideas, regularly scheduled hackathons, gamification, and communal discussion boards. All business and IT associates are incented to participate, backed by strong support from the senior leadership team.
Some of the new ideas, like their skill for Amazon Alexa and an associate mobile app, are already in production. Many others are in the development pipeline following hackathons focused on increasing customer retention and potential uses for chatbots. Grange has also benefited from adapting their cultural mindset to structured, scientific experimentation and accepting failure as a key learning step toward successful innovation and creativity.
Grange’s direct, inclusive approach to innovation complemented their established business practices. The first hackathon dealt with policyholder retention, taking a new look at an old problem. Together with advanced technologies like natural language processing and chatbots is simple, low-tech collaboration: communal whiteboards for brainstorming and communication across siloes, with enthusiastic participation by top executives.
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This year’s insurer award winners are well-established companies with long histories, not greenfield insurers. Together, they have been writing insurance for 335 years. As exciting as the InsurTech world is, it is not the only home of innovation. In fact, the shifts that the winners have taken show how they can take advantage of the best of the new world without giving up their existing expertise. The convergence of these two ways of thinking positions them as Next-Gen Insurers. What is clear from these examples is that these shifts are possible, valuable, and indeed central to the future success of these organizations.
So, we urge insurers of all sizes and lines of business to look closely at these examples of convergence, where innovation complements an insurer’s established strengths. The opportunities are out there in every aspect of your business – and are paying dividends to the business of insurance.