Tag Archives: innovation lab

How to Find Distribution Payday

Even before venture capitalists started funneling resources into insurtech, insurers were aware that channel development and effective distribution management was one of the keys to driving growth. Pipelines or channels have a way of either facilitating sales or impeding progress. They were governed by the same rules a decade ago that still apply today, with the exception of some new and innovative digital differences. More routes into the organization and faster journeys from quoting through policy issue have always made for better business.

An examination of the significant venture capital invested in new insurtech startups leads many to believe that the world of insurance is on the verge of a revolution. And the most logical place for disruption is in distribution. This is evident in the changes taking place with how and why people buy insurance, largely now influenced by digital technologies and ease of doing business via the internet.

See also: Are Crypto-Currencies Money or Property?  

As further evidence for the viability of channel development, insurtech investors have gravitated toward distribution and distribution-related activities. Investors may see a quick ROI. They may perceive a low-risk investment. They must also see an opportunity for increased flow into the sales pipeline.

In Majesco’s new report, Succeeding in a Multi-Channel World: Channel Efficiency, Optimization and Speed to Value, we trace recent insurtech developments and match them to parallel market changes. Rapid changes in customer behaviors, technology-driven capabilities and market boundaries are putting pressure on the insurance industry to adapt, and a key pressure point is distribution.

Beyond optimizing and aligning digital front-end with core distribution management back-end and enhanced data and analytics to create operational efficiencies that accommodate all chosen channels, insurers must implement an approach to designing, developing, solidifying and protecting valuable distribution relationships, including agent and broker relationships. Further, they must be able to manage those day-to-day relationships with modern, innovative technologies and processes.

In other words, channels aren’t something that insurers should build and then consider “built.” They are in need of constant change and optimization because much channel growth will happen in areas where relationships are just as crucial as digital preparedness.

Majesco dispels some common business thinking surrounding channel expansion. For example, direct online sales are still reasonably slim in the marketplace compared with agent-led closings. Yet, a high volume of agent-led closings were started through online research, quoting and information-gathering. This kind of customer journey must be supported by a flexible channel structure that will allow for a start/pause/switch/close sales process flow. If it isn’t enough that the customer is clamoring for omni-channel service, agents themselves (once wary of digital preparedness) are also interested. Agents are waking up to the realization that they stand to benefit by gains in both end-customer service and agency service.

While insurance companies and agent/brokers continue to dominate the customers’ research, buying and service experience, lines are blurring across all lines of business within distribution. There is strong interest among forward-thinking insurers in working with new, alternative sources and channels. These channels will work as new revenue streams, culling growth from additional markets and new products.

A great example of this would be SafetyNet, a new product/channel coming out of CUNA Mutual Group’s innovation lab. SafetyNet customers pay a small monthly fee to receive a lump-sum payout in the event of a job loss or disability. The distribution channel is entirely digital, the market is entirely new (targeting individual low/middle income workers with low savings) and the product was built to fit.

Viewing distribution through ROI glasses

In this new and ever-changing business landscape, insurers must rethink distribution-related strategy and execution; namely to one that requires a digital, multi-channel focus—from back to front office, and from an internally focused business model to one that considers the ecosystem across the entire distribution network.

Insurers need to integrate and align the right technologies, data and systems to improve existing channel development as well as to approach new channels and partnerships that leverage the insurer’s ability to properly service all stakeholders. We look at this as growing the channel ecosystem. Randomly adding channels, however, cannot work without an understanding of how that particular channel contributes to greenfield growth or additional revenue. It is best to use speed to value as a criterion for launch, with standard ROI opportunity as a gauge for prioritization. Long-term investment is no longer a viable standard. All channels are subject to frequent adaptation, expansion or closing — based on the ever-changing requirements of customers.

“Show me the product!”

Customers don’t think in terms of “channels.” They don’t care how a purchase happens. They just want the process of finding and purchasing to be seamless, consistent, intuitive and painless. If an insurer can become adept at being everywhere customers may want them to be — a true omni-channel environment — then they are likely to keep churn to a minimum while optimizing growth. For many insurers, this also means upgrading agent capabilities as well as data analytics. The goal is for the face of the organization, whether online or in-person or by phone, to show a consistent understanding of the customer and a predictive knowledge regarding their needs. Just as Amazon can use algorithms to auto-populate related products, insurance channels can use AI and robo-advisers to anticipate customer appetites for new products or supplemental services.

See also: Distribution Debunked (Part 1)  

As the channels blur, the “brand view” must be prepared to lead customers to their intended destinations. For example, the customer may wish to initiate an application on an insurer’s smartphone app, or begin on a comparison site. The customer may want to later make changes to the application using a laptop or tablet. At some point, the customer may have questions and wish to enlist a chatbot or human agent. Finally, the customer may wish to complete the app with a smartphone or in an agent office. To accomplish this fluidity, an insurer needs access to policyholder data in real time, with a complete alignment in customer, channel partner and back-office core systems.

To bring this all back to where we began, an analysis of the JOURNEY and FLOW is the key to distribution growth. We see clearly where insurtech investment is headed. We see uniformly that customer behaviors are dictating an omni-channel approach. We understand the need to improve agent service while building digital direct channels. All of this leads us to one conclusion — succeeding in a multi-channel world is a matter of smart investment.

For further evidence on the importance of distribution strategies, be sure to read Majesco’s white paper, Succeeding in a Multi-Channel World: Channel Efficiency, Optimization and Speed to Value.

Why Your Innovation Lab Is D.O.A.

According to a recent Innovation Management post, Are Corporate Innovation Centers Too Big To Fail?, the number of such centers or labs across the globe jumped from 301 to 456 over the course of the 15 months ended in October 2016. This 60%-plus increase reflects legacy enterprise efforts to deal with inescapable disruption.

Boards and the C-suite see labs adding value by:

  • Driving understanding and alignment of their businesses to changing customer and market needs,
  • Attracting people with expertise who are entirely different from the talent running day-to-day operations. These are the kinds of people who can spot trends far in advance and connect the execution dots to commercial opportunity, and
  • Accelerating innovation of all types – business model, product, brand, experience and process, among others – attacking the revenue anemia and margin compression that afflicts pre-digital companies.

See also: What Is the Right Innovation Process?  

One segment of innovation labs is just theater. There is another segment spawning high-potential revenue streams that would not have come about otherwise. But too many are established with good intentions and high expectations, yet run into a common set of seven failure points:

  • Innovation is treated like a project or activity. It is deemed essential yet isn’t integral to the strategic plan projections. Worse, innovation is booked as an expense line for a year or two, with a vague future dependent on how everything else is going. I empathize with the CEO’s decision to assume no upside on revenue as a way of managing the high risk of failure associated in particular with disruptive innovation. However, this decision creates unintended consequences, starting with undermining accountability for results. The lab may be destined to deliver a self-fulfilling prophecy – either not getting results or not being able to measure the results that pilots generate.
  • Innovation is placed in a protective but isolating bubble. It is smart to protect new ideas from the natural instincts of a mature organization. The problem becomes that being placed inside a bubble – e.g., physical location or reporting relationship — makes the lab feel even more foreign to everyone else. The result is a reduced chance of ever being integrated to accelerate scale, leverage the organization’s reusable infrastructure, access the client base or tap into existing brand equity.
  • Top-of-house leadership lacks skills or courage. At the end of the day, if the CEO or business unit head do not have skin in the game, or do not actively hold all directs accountable for the lab’s success, innovation efforts cannot take off. Perhaps the CEO has checked the box for the board by creating an innovation lab, and then allows a budget cycle or two to pass, assuming this is enough time to produce results. Or this is such a new game that, through nobody’s fault, there is a lack of expertise on how to drive a successful lab effort. New roles are created, and hiring mistakes are made.
  • The lab is expected to find the silver bullet answer to a poorly defined problem. “It’s a technology problem.” Or, “We need partners.” Or, “We need to move everyone to Silicon Valley.” And so on. Survey results reviewed in Digital Dynasties: The Rise of Innovation Empires Worldwide reveal that “partnering with ecosystem” is the core operating objective. Toward what end? What marketplace problems is the lab trying to solve? There is often not an answer grounded in an understanding of the unmet needs of large enough segments toward which the lab can point its energy.
  • Enabling capabilities and governance get insufficient attention. Gaps in infrastructure, data access, process, policies, metrics, goals and communications require as much or perhaps more attention than coming up with the innovation concepts themselves. Executing innovation to achieve commercial impact demands that those involved get dirt under their nails at every level of the organization. Ideas get lots of focus. Reality is that the hard work is in the unglamorous details of navigating bureaucracy, reforming status quo procedure to allow for speed and agility and motivating the organization as a whole to support change.
  • Talent criteria to succeed are demanding, making people hard to find. Succeeding as a team member of an innovation lab takes a complex set of personal, leadership and functional abilities and skill. Identifying the right profile is tough, and then finding the people who match the spec is even tougher. There are conflicts between the politics of consensus that may be part of continued funding and the lab’s inherent challenge to the status quo.
  • The culture built on past greatness can stop an innovation lab in its tracks. The right construct for an innovation lab must achieve a tough balancing act: fitting alongside the corporate culture, challenging it, and leveraging it, all at the same time.

See also: How to Create a Culture of Innovation  

The most persistent failure point I have seen is to not recognize and connect the dots between the desire to innovate and the mechanics of execution and followthrough. That is why one of the biggest wins can be to break innovation execution down into small manageable steps that produce signals along the way, including progress markers such as hitting important milestones, getting a pilot to market and seeing impact, enabling capabilities to deliver or mobilizing resources against a defined set of market needs.

What Limelight Shows on InsurTech’s Future

Limelight Health, the winner of our start-up Showcase at our first Insurance Disrupted | Silicon Valley, gives a sense of what’s to come with innovation in insurance.

Limelight Health has a product called QuotePad, which is one of the first real-time, mobile, all-in-one quoting platforms for health insurance and benefits professionals. (The others highlighted at the Showcase are RigGroupHubroostJumpstart RecoveryZenehomeSureify.)


Jason Andrew, CEO of Limelight, says what his company is doing is a harbinger of even bigger changes: “We are witnessing one of the largest transformations in the history of a multitrillion-dollar industry. New technology is changing the game for the entire insurance ecosystem. Quicker, more seamless data integration is changing the insurance process, from the way consumers research and purchase insurance to how claims are underwritten. As a result, companies large and small are sprinting to keep up with the demand for agile and integrated technology platforms that can harness this growing data volume and extract real value from it.  The largest carriers are now paying attention to big data, spending more money on research and bringing on data scientists to analyze and shape the future of insurance. “

As the industry moves from a legacy framework to a series of more connected systems with intelligent logic built in, all parties involved in the selling and decision-making process will be allowed to spend more time executing decisions and much less time on the administrative work that is a large and protracted part of the process today.

Andrew says, “For the health insurance market, which is fragmented with a lot of outdated systems that don’t connect or communicate easily, and where redundancy often leads to a high probability of error, we see this as being where QuotePad will make a significant impact on the insurance industry.”

Limelight Health was born in February 2014. Before that, the insurance technology boom had not fully launched, and it took several years of pitching, partnering and persistence to gain the attention of an industry that now supports the cause. Prior to 2014, no one was really interested in investing in insurance.

What we now know as #insuretech and #fintech was not the sexy vertical it is today. And we’re just getting started.

If you’re in the industry you are probably keenly aware of some of the changes that are coming, but not all. Please consider joining us for future Insurance Disrupted conferences, with our start-up Showcases. The next will be held March 22-23 in Silicon Valley. ITL readers receive a 15% discount here.

Organizer and host of Insurance Disrupted Conference: Silicon Valley Insurance Accelerator – SVIA

Innovation Partner: Insurance Thought Leadership

Conference sponsors: Aflac, Munich RE, Captricity, Zendrive, XL Innovate, Saama Technologies, CRC Insurance Brokers, Novarica