As 2015 begins with the promise and unparalleled potential of
opportunities as a Next-Gen Insurer, achieving and then retaining market leadership will become increasingly difficult and
challenging due to the intensification of change and disruption
from emerging technologies, new competitors, market trends,
customer demands, and much more.
These elements of change and disruption have spawned new
companies and transformed existing ones in other industries,
powering them forward as some of the most innovative companies. Forbes, Fast Company, and others look at companies
across all industries to identify innovation leaders that have a
product or service that is disrupting and redefining industries,
changing customer expectations and habits, redefining economic assumptions, or leveraging new technologies that create
new offerings and experiences that others must live up to, to
mention just a few of the possibilities.
In all of the “top” lists for 2014 are the companies we expect
to see—Google, Apple, Amazon, Twitter, and Facebook. We see
transformed, established companies like Netflix, Proctor & Gamble, Ford, 3M, Salesforce, GE, Cisco, Samsung, Phillips, and Nike.
And we see new start-ups like Airbnb, Uber, Fitbit, and Tesla.
Together, these examples represent a wide array of industries including high tech, manufacturing, retail, entertainment, software,
hardware, automotive, and others. What is most striking is what
we don’t see: Insurance companies are conspicuously absent.
For the industry and for each insurance company, this
should be of great concern. Why? Because the digital revolution
that is well underway is reshaping, shifting, and eliminating the
long-held, traditional boundaries for industries and creating
a new competitive landscape that is undergirded by changing
customer demands, expectations, and experiences. All is not
lost. We see encouraging signs of hope and opportunity, but to
leverage these opportunities, insurers must embrace innovation
and outside-in insights and rise to the challenge in order to
leapfrog to the top of market-leader lists.
Open Innovation, Collaboration Transforms
In SMA’s recent Innovation in Insurance: Expanding Focus and
Growing Momentum research report, we confirm that insurers
continue to focus on innovation, with over a third investing
in and adopting technology to position themselves as movers
( 28 percent) or market leaders ( 9 percent). This is supported in
SMA’s Emerging Technologies: Reshaping the Next-Gen Insurer
research report, which finds that five of nine emerging technol-
ogies are projected to reach an adoption tipping point in three
years and all nine technologies in five years.
Together, these highlight encouraging signs for the insurance industry. However, given the pace of disruption
and change from new technologies, the pace of adoption by
industries outside of insurance, new economic models from
the shared economy, new competitive threats from outside the
industry, and most importantly, the changing demands and
expectations of customers, the insurance industry must pick up
the pace of transformation through innovation and collaboration to compete in this new digital world.
Early in 2014, the blog, Embrace the Power of Open Innovation
and an Ecosystem to Re-Imagine Insurance, noted the combination of open innovation and an ecosystem empowers the collaboration and the sharing of knowledge, information, and ideas
that are helping to reimagine industries and companies. In the
Innovation in Insurance research (mentioned above), 26 percent
of insurers are using open innovation, primarily with agents, and
35 percent are developing an ecosystem of relationships, primarily with existing partners. While these are great first steps, they
are not bold enough to bring in the outside views that are critical
to success in today’s digital world, where industry boundaries
are fading and being reshaped by more innovative companies.
Insurance is in dire need of some boundary reshaping.
Disruptive Power of Emerging
Technologies and Trends
Just consider the disruptive potential of the Internet of Things
(Io T). As noted in the SMA research brief, The Internet of
Where Are the Innovators?
Many insurance companies take advantage of the innovations developed by
those from outside the industry, but carriers are conspicuously absent from the
list of true innovators.