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January 17 2018 | Deb Smallwood

Every year, for the last six years, SMA has completed its Innovation in Insurance research report. Our insights are based on targeted research, experience in the industry, and insights from our customers. It is with our unique lens that we investigate and analyze innovation in insurance to share trends and findings that will guide the industry into the exciting new year.

innovation mandatoryThis year’s report is called “Innovation is Mandatory.” The findings continually point back to the overall theme of the research: innovation is happening everywhere, in all insurance segments, and it has expanded to the point that ignoring it is no longer an option.

In the report, we look at who in the company is leading innovation. Innovation leadership is now initiated more and more in business units and less and less in IT. The shift is indicative of the internal innovations that are taking place within the organizations: new roles for innovation, strategic planning offices, c-suite positions, and innovation labs, among others. The research also indicates that, as innovation solutions are maturing, there is a natural progression away from IT and toward business management.

While leadership for innovation has declined for IT, the research shows that IT still leads in emerging technology adoption. And it makes sense. Five years ago, innovation was in a similar place. SMA anticipates that the trend for emerging technology will follow the same path that innovation has; it will eventually shift toward management by the business. We are already seeing areas where it this happening. As emerging technology becomes mature technology, the transition will continue.

Another interesting discovery from the research is that there is a clear indication that insurers don’t believe they are keeping up with the pace of innovation. The pace of new technology adoption coupled with the explosion of InsurTech startups entering the marketplace is changing the competitive landscape. The clear majority of respondents identify themselves as mainstreamers just trying to keep up with the pack. It will be interesting to see where that number heads throughout 2018.

Finally, we see the importance that the changing customer experience has on triggering innovation. The digitization of the world is another force that drives innovation and has resulted in so many of the changes that have been made over the last several years. Becoming a digital insurer is essential to maintaining a competitive edge and shifting the focus toward the customer – we continue to see more value-in-use products and more incentive-based products. The digitization of the insurance ecosystem will continue and prove that innovation is mandatory, and not just for some. Innovation is for all.