(Image source: EIS.)
According to McKinsey’s latest “Global Innovation Survey,” more than 80 percent of executives believe innovation is an important aspect of their growth strategy. However, only 6 percent are anywhere near satisfied with innovation performance. This is a monumental gap but it’s not surprising, especially considering the challenges posed by the pandemic.
The ability to innovate at speed is perhaps the best indicator of future success. As insurance executives and boards have watched emerging InsurTech firms and tech giants enter the market with digital insurance products that gobble up market share, the need to build a culture of innovation has never been more urgent. However, the reality is that while leaders are keen to innovate, altering long standing processes and policies ingrained in the business proves challenging. Keeping operations running smoothly by leaning into what they know and what’s always worked often wins out. The result is talented people and teams end up handcuffed by legacy processes and systems.
“Innovation” is often focused on replicating what was previously done, but with a prettier face or through a different channel. True and genuine innovation requires rethinking how you serve customers. A culture of innovation encourages employees to disavow orthodoxy and come up with a fresh new way to solve an unmet customer need and monetize that solution. Whether your innovation efforts are driven by new products, markets, customers or business models, innovation must increase value and spur growth. Building a culture of innovation doesn’t happen passively. It requires commitment and careful nurturing. Here are three considerations as you look to realign your culture around innovation.
How leadership can foster insurance innovation
At its core, culture is basically an expression of “the way we do things around here.” Culture is all about the behaviors that are accepted and that become the norms your company lives by. These are built over time and require deliberate reinforcement. And guess what? It’s no shocker that a company’s cultural behaviors are driven by its leadership. KMPG estimates that 70 percent of the impact to culture comes from leadership decisions. Is your leadership team giving employees the freedom and time they need to get creative? Are you rewarding and incentivizing innovative thinking or are bold ideas more likely to be punished as a waste of time? Leaders who want to inspire true cultural change not only need to allocate budget and resources for experimentation. They need to encourage and embrace it by removing fears. This change in mindset can be a bumpy ride for many insurance companies. To overcome resistance, many insurers create innovation labs or greenfield entities that have the autonomy to break free from the embedded routines of the core business.
How insurers can compete for better tech talent
Insurance companies are competing for talent with InsurTechs and firms from other technology sectors. The competition to hire and retain innovative thinkers has never been as fierce as it is today. How can incumbent insurers compete with hotshot tech companies? Start by taking a hard look at how you are rewarding your workers. Many insurance companies are driven by vertical career paths, stability, and traditional corporate perks. In contrast, fast-moving tech firms entice talent with cultures that promote work-life balance, risk-taking and creatively challenging work.
There has been a significant mindset shift in what makes a workplace desirable to the next generation of workers. Another factor involved in attracting and retaining talent is the extent to which employees are given the freedom to experiment. Innovation requires a testing and learning mindset. Leadership needs to remove the fear of failure and give workers the opportunity to try new ideas. In addition, they need to provide the technologies to support this type of data-driven innovation, which brings us to our next requirement to foster a culture of innovation.
How technology can support insurance innovation
To create a culture of experimentation and a fail-fast mindset, having the right tools on your side is essential. For insurance companies, adopting a cloud-based coretech solution is essential. The rise of API-first platforms lets insurers overcome legacy constraints while giving developers the freedom to be creative. For a culture of innovation to take root, insurers need to give developers, engineers and innovation teams access to data. Whereas monolithic, on-premises systems lock data into silos, the cloud removes barriers to accessing data, contextualizing it, and augmenting it with third-party data sets. An area where data-sharing has great potential in insurance is machine learning. Models that can surface new data points and leverage alternative data sources are instrumental in making activities like continuous and automated underwriting, visual claims processing, fraud detection, and usage-based insurance (UBI) a reality. The more data an insurer can put into machine-readable formats, the easier it is to create solutions that reduce risk and deliver delightful customer experiences.
Another area driving cultures of innovation is the continued evolution of DevOps tools that drive agility and continuous improvement. Leading service providers, like Microsoft Azure and Amazon Web Services (AWS), offer advanced DevOps capabilities. Platforms like EIS that are built on these cloud services can deliver new enhancements, features, and services at pace, without the need to interrupt your business with “big-bang” once-a-year upgrades.
Ready to learn more about insurance innovation?
In the face of unprecedented technological growth, the need to embed innovation into company cultures has never been greater. To learn more about how the EIS platform for open, high-velocity insurance innovation can provide your company with the tech foundation it needs to innovate like a tech company, contact us for a demo.