Solving The Insurance Innovation Equation
When it comes to digital transformation, it’s no mystery that the insurance industry is grappling with incredible opportunities to innovate, thanks to artificial intelligence (AI), machine learning and data analytics. A recent Accenture report suggests that widespread adoption of innovation that can reinvent the customer experience and drive collaboration could boost industry-wide profitability by more than $10 billion.
Many in the industry are actively embracing innovation, but when it comes to leveraging new capabilities across an entire company, roadblocks abound.
A recent survey of 178 senior insurance executives found that 50% of insurance companies consider innovation a strategic priority, and 70% have already implemented some innovation strategies. The survey, conducted by The Institutes and ITL Innovator’s Edge, found that a majority of companies expect to leverage technological advancements such as artificial intelligence, telematics, Internet of Things and blockchain in their innovation efforts, and they believe these technologies have the potential to influence the entire insurance ecosystem.
A few select areas in insurance and risk management seem to hold the most promise for improvement. Approximately 82% of respondents are pursuing innovation to improve customer experience and engagement, while 73% are focused on improving operational efficiency. More than half are using innovation to develop new products and services that better meet customer needs.
But innovation is more than an opportunity in insurance; it is increasingly viewed as essential for survival. With InsurTech companies growing quickly and mobile apps redefining how policyholders interact with underwriters, insurers must innovate to adapt and thrive.
However, innovation doesn’t happen overnight. It requires a strategic plan, a financial investment, a change in company culture and attitude, and an unwavering commitment from the entire staff. We believe that a company-wide approach is the only way to build a successful innovation plan.
We know that few companies have found success by launching a variety of small projects in an accelerator or incubator, but true success requires your entire staff to buy in, and to receive the tools and training they need to keep innovation top of mind across all of their job functions, from the CEO to summer interns.
Also, to employ this innovation-success equation, companies should first understand the primary hurdles standing in the way of innovation and adopt strategies to tackle them head-on:
№1: Legacy IT systems
Approximately 63% of insurance executives identified legacy IT systems as a hurdle to pursuing more innovation in their business. A recent analysis from Willis Towers Watson found that the insurance industry lags behind most others in terms of updating technology systems that are used to perform critical business functions. When legacy IT systems are incompatible with new software and applications, it prevents a business from reacting nimbly to the emergence of new capabilities.
Technological advances arise overnight, and insurance organizations must have an IT infrastructure capable of harnessing digital innovations quickly. While it may require up-front financial investment and slight business interruption, regularly updating core technology systems to stay modern and nimble is fundamental to innovation.
№2: Cultural and internal opposition
For an innovation strategy to succeed, the entire organization needs to buy in culturally and commit to a new mindset. For many companies, this is a challenge; approximately 44% of insurance executives cited cultural and internal opposition as a roadblock to innovation.
Truly embracing innovation means not being afraid to try something new, get creative and inevitably stumble along the way. Innovation is equal parts art and science, and achieving this cultural shift will require business leaders to be more accepting of failure. Even adopting a new mindset comes with its own set of challenges and trial and error. Energy and commitment must come from the top, and CEOs, CTOs and senior managers need to press for new ideas.
№3: Need for additional skills and talent
More than one-third of those surveyed identified a lack of the right talents and skills as a roadblock preventing their company from innovating. This might lead many to believe that closing this skills gap requires new hires well-versed in technology. However, this isn’t necessarily the case.
Existing employees know the business better than anyone and are perfectly suited to learn new skills and capabilities when learning is prioritized and they are provided with adequate information. An investment in the right training and skill-building today can make all the difference in the success of the insurance industry’s future innovation efforts.
Solving the innovation equation
Beyond leveraging exciting new technology, an organization needs employees to carry out the innovation strategy. A continual drip of training and education will help your staff develop new capabilities and prepare them to help improve both operational success and customer satisfaction.
The Institutes and ITL Innovator’s Edge recently launched the first certification program in risk innovation designed to help the insurance industry address its innovation education needs and spark progress. The four-part certification offers managers, directors and other leaders insights on how to establish an innovation culture and mindset for themselves, their teams and their organization.
By partnering with innovation experts with deep knowledge of how the industry operates, insurance organizations can solve the innovation equation to better serve policyholders and boost their bottom line.
This article is adapted from an original by Property Casualty 360.