I recently had the opportunity to moderate a panel discussion on innovation in insurance during Novarica’s Research Council Meeting at InsureTech Connect. Panelists included my colleagues Rob McIsaac, Mitch Wein, and Kevin Rall, who discussed challenges and ways in which insurers are bringing more innovative practices to their organizations.
The Impact of Regulation
Panelist Mitch Wein noted that the major difference between innovating in insurance versus other industries comes down to one word: regulation. Insurers have to contend with 57 jurisdictional authorities and new regulations like GDPR, NY DFS, and the California Consumer Privacy Act. Yet digitally native consumers like Millennials are going to expect product and customer experience innovations regardless. As Rob McIsaac pointed out, being able to innovate and experiment may mean finding environments in which it is safe for insurers to “play.” Some state commissioners, for example, have made it easier for insurers to test sandbox initiatives. Continued collaboration between regulators and insurers will be necessary to foster trust and enable innovation down the road.
Avoiding Business as Usual
Kevin Rall noted that true innovation depends on a leader who owns and champions a more innovative culture. The job is not just to find a new technology, but to change culture; this often means committing resources and securing executive support. And as Rob noted, business-as-usual activities can stifle innovation, and resources shouldn’t be constrained with a “day job”. In order to truly commit, some resources will need to make innovation their full-time job. This can come in the form of an innovation lab tied to business goals that is unencumbered by internal barriers.
Buying Innovation
Mitch observed that a lot of companies have established venture capital arms not only for investing, but also as a mechanism to keep tabs on what’s available in the market. One carrier that we know of invested in a company through a VC arm and placed a resource on the board, giving them the ability to influence the startup’s direction. Some insurers are also buying companies outright to give them traction in areas in which they haven’t traditionally had success. There’s certainly a price to pay to bring innovation in-house, but this doesn’t mean it’s confined exclusively to large carriers. Rob noted that many midsize and regional carriers have rolled out new and innovative capabilities, in some cases supporting new distribution channels.
If you didn’t have the opportunity to attend our Research Council Meeting at InsureTech Connect, we’ll be hosting a series of Special Interest Groups throughout the fall that provide opportunities for private discussions among peers on topics of mutual interest. Feel free to reach out to me at [email protected] to find out more about becoming a Council member.
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