Innovation is vital for every industry and every company.
Industries from retail to books, travel, music, movies,
automotive, and pharmaceuticals have found the foundations
of their business and operational models challenged, requiring
new thinking, experimentation, adoption of new technology, and
The insurance industry is not immune. It faces the same challenges and the pace of change is so
rapid that it is almost staggering.
Most companies have failed to
fully anticipate it or prepare for it.
Every month, new technologies,
the mash-up of technologies, and
new uses for these technologies
are emerging. The empowerment of the customer is creating
new demands and expectations.
Decades of business traditions and
assumptions are being challenged.
In the history of the insurance
industry, this level of disruption is
And the burning questions
for insurance leaders are: How
are you responding? Are you
leading? Are you modernizing?
Are you optimizing? Are you innovating?
A Catalyst for Changing Results
A new kind of insurance industry is emerging and the Next
Gen Insurer is advancing alongside, influenced by the changes
that are taking place inside and outside of the industry, accelerated by the explosion of data and the proliferation of new
technologies, and powered by innovation. These influencers are
affecting the touch points and redefining the entire insurance
value chain. They are transformational and highly disruptive.
As noted by one insurance innovation leader, “There is an
outrageous level of individualism—from devices, data, and
components—that will break the traditional infrastructure,
culture and systems of traditional insurers.” Companies such
as Google, Amazon, Apple, Uber, Zipcar, and others are taking
advantage of next-gen and emerging technologies and intensifying this level of individualism in the process.
What is the essence of innovation? Innovation comes from
a desire and a commitment to continually rethink, reinvent, or
reimagine the business, from products and services to process-
es, and to enact changes to transform the customer experience
with game-changing results.
Innovation is no longer just a nice-to-have initiative. It’s a
must-have, strategic core mandate that will define a new era of
winners and losers. Insurers operating with the long-standing
approach of being followers, even fast followers, are creating a
potentially insurmountable risk to
the survival of the business. Why?
The pace of change for technology,
competitors, influencers, and cus-
tomer demand put that approach
into serious peril. Remember
Kodak and their response to digital
cameras? Blockbuster to Netflix?
Companies across all industries
are looking to innovation to unlock
a revitalization of competitiveness
and customer value and reinvig-
orate what made them successful
leaders in the first place. There is an
unparalleled opportunity for any
company in any industry to ignite
a new future that is limited only by
Steve Jobs did it at Apple, first
with the iPod, then the iPhone, and finally the iPad. In less than
five years, this unprecedented wave of innovation not only trans-
formed the traditional telecommunications and computer indus-
tries, but also the music, retail, media, and banking industries. It
inspired the emergence of new companies, from social media to
gaming, and gave birth to the “app industry” for smart devices.
These are instructive examples of the failure to innovate as
well as the success brought about by embracing the innovation
initiative. What can insurers learn from these? The near future
holds promise for unparalleled opportunity to increase customer value, engagement, and loyalty for insurers. Those who
welcome innovation and capitalize on emerging technologies
and influencers will reap the greatest reward. In contrast, those
that do not will find themselves spiraling downward, losing
competitive position and financial stability.
Unfortunately, many insurers, regardless of size, do not fully
understand or have a comprehensive view of the depth, breadth,
and complexity of the disruption and transformation that are
taking place in the insurance industry. That is why SMA’s Google
The Innovation Mandate for Insurance
In an era of change, defining winners and losers offers its own challenges.
Source: Strategy Meets Action 2014