Insurance is rarely the “tip of the spear” in terms of technology innovation. Yet increasingly, insurers need to be aware of broader developments in the economy and adjacent industries and carefully consider the implications for their businesses. Technology for the sake of technology is generally not a best practice, but a focus on innovation which uses leading capabilities to create competitive advantage can bridge the gap between consumer expectations and current insurer capabilities. There are a number of factors that insurers need to consider in expanding innovation within their organizations:
- Organization and investment: Establishing ownership in the business can help ground innovation in broader organizational goals. While new technology can be enticing, there is a need to put a clear filter on opportunities and assess them against potential business benefit. Predictable, committed investment is also necessary to help nurture innovation.
- Best practices and benefits: Strong commitment from senior leadership can set the tone and mitigate opposition. Separating innovation initiatives from “business as usual” processes can help preserve the start-up mentality needed to move quickly and fail fast. Also crucial is attracting and retaining the right talent to take on the innovation mantle.
- Challenges: The organizational, cultural, and political forces in an organization need to be proactively managed for true innovation to flourish. What’s more, the traditional ROI model will generally not work effectively and may adversely impact organizational momentum and the ability to adapt to early phases of investment.
Embarking on a path of innovation can cause disruptive changes to insures, yet it can also create significant value. For more on approaches, best practices, and challenges to innovation at insurer organizations, see our executive brief Innovation in Insurance: Expansion and Key Issues.
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