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10 Reasons to Innovate — NOW!

We’re busy gearing up for the annual SMA Summit, where innovation will take center stage. In the spirit of the summit, I started to gather some inescapable facts that could inspire us all to innovate and improve – to truly become the Next-Gen Insurer. But, rather than peddle the same old innovation benefits and business rationale, I thought it would be refreshing to share 10 facts about change and innovation that will directly affect insurance and that may inspire you, surprise you or reinforce why you should be continuously improving by reimagining and reinventing the business of insurance!

  1. Younger generations like Millennials and Generation Z are going to be the biggest consumers in the market in five to 10 years. Make sure you can reach them. They will not use paper applications or have a face-to-face meeting, but they will be searching for options from their phones and cars. A typical mobile user checks her phone more than 100 times a day (Marketing to Millennials).
  2. Innovative workplaces attract the best and brightest talent. Today, word of a stale, outdated work environment spreads fast. Don’t be one of those employers. Invest in talent, but also invest in your infrastructure and creating an innovative workplace (How Great Companies Attract Top Talent).
  3. A majority of insurers (65%) have focused on innovation for five years or less. You aren’t alone, and, surprisingly, you probably aren’t far behind. With the right focus, you can make remarkable strides in a short amount of time (SMA Research: Innovation in Insurance: Expanding Focus and Growing Momentum).
  4. 80% of all crowdsourcing is done by small business and start-ups. Embrace the crowd! It is often the most cost-effective way to generate ideas. Big business loves the crowd, too. Just look at McDonald’s crowdsourced burger or Apple’s crowdsourced mapping tools (Crowdsourcing: Great For Your Business).
  5. The amount of stored data doubles every 24 months. The U.S. Census estimates that the population has grown more than 27% in the last two decades. Changing demographics, aging citizens and diverse populations are changing the face of data accessible to insurers. To stay on top of the situation, you need a data and analytics strategy that makes the most of the new data available (Vernon Turner).
  6. Wearable devices have grown 200% every month since 2012. This doesn’t mean that wearables won’t eventually be replaced by something else or evolve. It does mean that wearables are growing so fast that it makes sense to try to tap into some of that innovation and apply it to your own organization, your processes or even your products (2013 Internet Trends).
  7. It is six to seven times more expensive to acquire new customers than it is to keep existing ones. One risk of not innovating is that you may start losing customers who can find better, easier-to-use insurance options. Studying consumer behavior might be the best indicator of market trends and areas to innovate. Don’t lose renewals because you haven’t kept up with market demands (15 Statistics That Should Change the Business World But Haven’t).
  8. More than 40% of the companies at the top of the Fortune 500 list in 2000 were not on the list in 2010. The digital age shuttered many long-standing businesses. Some experts think that, in the next decade, businesses that do not embrace innovation or adapt to market demands will suffer the same fate. Insurance is not immune to this phenomenon. Today, everything is connected (Sorry We’re Closed: The Rise of Digital Darwinism).
  9. Just 10% of cars were connected to the internet in 2012, but by 2020 it is estimated that 90% will be. It is amazing to think of how quickly we are witnessing innovation expand. What was once an outlier is now a standard (Amazing Facts Everyone Should Know About the Internet of Things).
  10. Internet of Things (IoT) technology has the potential to add $10 to $15 trillion to global GDP over the next 20 years. Like the connected car, IoT will eventually become standard. What insurers do with the new data available and the amazing growth potential will ultimately make or break them (Internet of Things Market Statistics-2015).

These facts are inescapable. Not only is innovation here, but the statistics are astounding. The time to embrace innovation and become the Next-Generation Insurer is now.

Thoughts From an Insurance Millennial

The risk management and insurance industry has become very concerned about how to attract young people and encourage them to pursue careers there. The industry has taken steps, including with programs such as MyPath  and InVEST, which educate students and young professionals about the industry and career paths that could fit their interests.

Looking at the issue from the standpoint of a Millennial working in the industry (I’m 21 years old), I’d like to suggest three other ways to spark curiosity in the “Next Generation”:

1. Auto Insurance 101 Classes

Most of the youth population hasn’t considered pursuing a career in insurance or is completely turned off by the prospect. Who could blame them? For many, their only exposure to the industry stems from paying high premiums for car insurance. When I started driving, I paid around $1,200 annually for insurance on a car I bought for $8,000. I didn’t understand why I couldn’t just save the money and, if something happened to my car, use it to buy a new one. I didn’t realize the exposure I had because I might damage someone else’s car or hurt another person.

An insurer could use this lack of understanding to design an auto insurance 101 course that would have two benefits. The course could explain coverage and create intelligent customers for the future. The course could also be designed to spark curiosity in some to learn more about how insurance works and about all the good it can do. Some will begin to ask their parents questions or even pursue studies in risk management and insurance in college.

Try adding incentives for taking the classes, such as reducing premiums or providing lower deductibles for the same price. Building intelligent consumers should reduce their risk as drivers, so the incentives might even pay for themselves.

2. Sponsoring Sports Teams, Clubs, etc.

Sponsoring sports teams, clubs and other youthful groups in a community or at a high school or college could be strategic in attracting the “Next Generation.” In addition to generating name recognition and positive PR, a company could expose some youthful minds to the industry. For example:

Someone sponsoring a local high school soccer team could create a competition to answer the question: How much are David Beckham’s legs insured for? The winner gets a signed jersey from a local Major League Soccer player.

Someone sponsoring a local college’s political clubs could create a competition around the question: How much would it cost to insure the White House? The winning club gets a paid trip to the state’s capital and a luncheon with some state officials.

3. Partnering with Teachers to Make “Classroom Insurance Policies”

This can be a fun twist on teaching a classroom about insurance. After working with the InVEST program to gain relevant teaching material, reinforce the concepts through a simulation that students can relate to. Create basic “classroom insurance policies” and give students an amount of “money” they can spend to buy different policies and endorsements. This would take some time initially to build the program but would be an enjoyable way for students to learn and get some exposure to reading a policy, applying endorsements/exclusions, etc.

An example: Forgetful Student Policy

A policy could include protection against forgetting that an assignment was due and would allow the assignment to be made up that night for half the credit (actual cash value). An endorsement could be bought to upgrade the policy so that the assignment could be made up for full value (replacement cost). Exclusions could include large projects or papers.

Creating interest and reinventing the image of the business must be an industry-wide, collaborative effort. Understanding that learning can be exciting for these young students and professionals should greatly increase the success of efforts to attract the “Next Generation.”