3 Steps for Successful Innovation in the Insurance Industry
Innovation often entails disruption of existing paradigms and transformative breakthroughs. This has traditionally been resisted in the conservative and highly regulated insurance industry, where the integrity of the business is measured in terms of adherence to set procedures.
However, with customer needs changing at a fast pace, and with multiple options available to manage risks, insurance companies may have no choice but to innovate and adapt their business structure to address the fast changing needs of their customers.
While the exact nature of innovative practices varies, what is important is to encourage innovation and creative thought within the organization. Here is a three-step path for successful innovation in the insurance industry.
1. Capture Ideas
A company’s workforce, being in the midst of business activity and having firsthand experience with everyday operations, would invariably have great ideas on how to improve product delivery, service offerings, and other critical business deliverables. The challenge lies in devising a scalable system to capture these ideas, share them across the organization and grow them as actionable projects. Ad hoc measures, such as one-to-one meetings, have limitations.
Innovators need to identify people who are naturally curious, support their inquisitiveness, provide them opportunities to follow trends outside the company and even outside the insurance industry and, then, encourage them to question why they do a process or procedure the way they do it or what is lacking.
2. Use Big Data Analytics.
Big data is increasingly viewed as a business imperative across all sectors, and the insurance sector is no different. Big data has the potential to offer solutions that not only transform processes, but also resolve long-standing business challenges. For insurance companies, churning the actuarial, financial, risk, consumer, producer/wholesaler, claims, and other types of data offer rich insights to understand customers, markets, products, regulations, distribution channels, competitors, employees, and other key elements better. These insights could be the primary fuel that sparks innovation.
The insurance industry has always captured and analyzed structured information associated with their products and policyholders. IBM’s 2012 New Intelligent Enterprise Global Executive Study and Research Collaboration reports 74 percent of insurance companies use information (including big data) and analytics to create a competitive advantage for their organizations. To make a difference, innovators need to extract value from unstructured and semi-structured information that remains largely untapped.
3. Adopt the right approach.
The best approach at driving innovation in the insurance industry where every change has to be given a lot thought and filtered through regulatory or other compliance channels is a consulting approach. This focuses on collaboration with an internal business partner, and crowdsourcing ideas specifically focused on a problem.
Direct distribution, predictive analytics, portals, mobile apps, and cutting costs through overseas outsourcing of policy evaluation are just a few examples of successful innovations recently adopted by insurance companies. Behind every such successful innovation is invariably a highly intuitive and flexible platform, backed by a process to define innovation and engage employees in this task. AllState Insurance, for instance, has used our Spigit innovation platform to successfully run its WhiteSpace innovation effort, which has, among other achievements, reduced the product development cycle by eight weeks, helped successfully launch a social media video campaign, and even launch a new insurance product.
Do you work in an industry that is resistant to innovation or change? How can you use these principles within your organization? Tell us about it in the comments, below.