We have heard a lot about the need for innovation in insurance generally and using technology specifically. As we enter the last quarter of 2013, two leading analysts seem to be taking somewhat different views on where insurance innovation stands and where it might go.
We’d like your thoughts.
Innovation is so pervasive, it looks like normal
At its September 16 2013 SMA Summit, Deb Smallwood, principal of analyst firm SMA reported in Insurance & Technology “that innovation is happening in a big way within the insurance industry.”
Based on recent research, Smallwood notes that “a remarkable 87% of insurers say that innovation is occurring at some level, and 20% have already established a strong innovation culture in their organizations.”
Innovation is not static. Smallwood notes that data and analytics are now established change agents for insurers. However use of these technologies are changing daily. Smallwood writes, “The challenge insurers now face is to begin to look at ways to use the data differently, whether it be to improve processes or to better inform policy.”
Steady as she goes
As reported in PropertyCasualty360, analyst firm Novarica is seeing more a ‘steady-as-she-goes’ pattern than ‘break-out’ activity with insurers these days. Based on a survey of 100 US insurers focusing on budget priorities for 2014, Novarica published a report which concluded, “Despite the rapid changes in technology across the economy, the main story of 2014 insurer IT budgets and project priorities is one of continuity.”
Novarica found that IT spending was basically flat when measured as a percentage of written premium. The analyst firm notes that this dovetails with insurers’ cautious assessment of their IT departments’ capabilities. The report concluded that the insurers plan to target investments “to get up to the bar, not over it.”
Most insurers indicate that the top priorities are the same as last year. These generally include policy-administration systems, business intelligence/analytics, portals and claims.
Data and analytics dominate
Both SMA and Novarica see data (including big data) and analytics as critical parts of an insurer’s framework for the future. However, there is a difference of opinion on capabilities.
SMA’s Smallwood notes that insurers will have to expend energy to keep up with changes to analytics,”but this new technology will soon be commonplace.”
Novarica is less sanguine. Agreeing that data and analytics are part of core capabilities for insurers, the report adds a caveat: “most insurers still struggle to deploy strong capabilities in most of their core areas, at least by their own assessment.”
What do you think?
Innovation and continuous improvement are, by all accounts, necessary for continued success. Furthermore, most would agree that technology is integral to true innovation in today’s world.
The analysts’ research leads in divergent directions. So we need to you sort these out.
Will innovation be the standard which will enable growth? Or will most of us continue to struggle to reach a stable innovation platform, ever trailing the curve.
Let us know. The future won”t wait.