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November 18 2019 | Mark Breading

Innovation has gone from a word barely spoken in property/casualty insurance to a trend that has swept through the industry. The past decade, in particular, has seen enormous progress in adopting innovation, operationalizing it into mainstream plans, and driving real transformation in the industry. This is, in large part, due to the change in the industry mindset on innovation over time. Even so, the industry, overall, could be characterized as in the early stages of innovation-driven transformation.

innovation mandatoryGo back 10 or 20 years, and most industry participants held that insurance was different from other industries, somewhat immune to external change factors. The product complexity, regulatory environment, and fundamental nature of the product (pay for something you may never use) did tend to insulate the industry from rapid change. Add to that the actuarial need to understand historical changes over long periods before making big adjustments to product or pricing, and you have a formula for a stable, slow-changing industry. All of those factors are still in play, yet new factors have created the conditions for insurers to think differently, reimagining their businesses and developing bold new strategies for success in the digital age.

The increasing power of the consumer, the sea change in how we communicate, and the rapid advance of technologies has created a whole new context for developing strategies. And the central ingredient in envisioning and implementing these new strategies is innovation. SMA’s new e-book, Insurance and the Innovation Journey: Lessons from a Decade of Progress, describes what has changed over the past decade as insurers have adopted innovation. A wide variety of organizational approaches, culture initiatives, technology tools, new roles, and more have contributed to a growing understanding of how best to harness and institutionalize innovation. 

Is there one right answer, a secret formula for success regarding innovation? Of course not. But there are some great lessons learned and a large palette of tactics and plans from which to choose. One way to make sense of the possibilities is to think of activities in five inter-related areas:

  • Driving Change: There are a variety of actions that must be put in motion by the executive team … actions that must be sustained over time.
  • Sparking Innovation: Giving innovation evangelists a voice, conducting sprints and POCs, and exploring new options are examples of the types of actions needed to spark innovation.
  • Operationalizing for Results: This is where the rubber meets the road – finding ways to embed innovative approaches, partners, and technologies into mainstream plans has proven to be challenging for many.
  • Investing for Growth: Setting up a corporate venture capital unit is the extreme example of investing for growth. But every insurer needs, at the very least, to find ways to reallocate funds for innovative initiatives.

And perhaps the most important of all:

  • Transforming Culture: It is quite difficult to achieve success in any of the other four areas without broad engagement across the enterprise via a specific set of strategies and plans to transform the culture and institutionalize innovation.

Will there come a point in the transformation of the industry where innovation has run its course, and the industry once again stabilizes? Perhaps that is possible, but our view is that it’s unlikely, at least in the next decade.

For more information, ideas, and examples, check out SMA’s new e-book, Insurance and the Innovation Journey: Lessons from a Decade of Progress.

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To learn more, please contact:
Mark Breading
Strategy Meets Action