Innovation is certainly the rallying cry for the current era. We wonder if, by trying too hard to innovate without looking at a bigger picture, we are pushing ourselves into uncharted and unprofitable territory. We’d like your thoughts.
To boldly go where we might not want to be….
Insurance & Technology’s Nathan Golia alludes to this in a recent article. Golia notes that the emerging Internet of Things is very fertile ground for innovation with technology (to make our lives easier and better) and with insurance (to manage risks in the new world).
In pursuit of innovation, however, we might be opening up a floodgate that will be tough to close. Consumers are becoming aware that all the new gizmos have one thing in common: they are very good at capturing increasing amounts of personal information.
Concern about privacy is one of the great impediments to implementations of Telematics-enabled Usage-Based insurance. We posted on this last June, suggesting that we have to ensure that we show respect for the private information and demonstrate a value to the consumer in exchange for use of the information.
It is incumbent on us to balance the innovation need we have with the value need the consumer has to create a win for both sides.
Is legacy a four letter word?
An additional challenge is the continuing battle many insurers have with legacy systems, and the constraints that these systems put on true insurance product innovation. But this can be balanced with some common sense approaches
We are aware of all the modernization projects underway, but there are a lot of organizations who continue to cling to 30 and 40 year old package systems, for all the right reasons: to avoid cost and risk of large systems replacement projects.
In a recent PropertyCasualty360 article, Maria Jasinski, vice president of IT at Michigan Millers notes that their old AS-400 based commercial processing system continues to work adequately, and adequately supports the company’s strategic direction of “leveraging strength of relationships with agencies”.
In our Insurace2023 study group, we spent some time looking at opportunities for insurance products that could not have been foreseen a decade ago, usage based insurance for property, and cyber risk to name two examples.
The challenge with new products such as these is that rating and underwriting are not the discrete activities they used to be. Sensors will detect changes in risk continuously, and can provide for real time remediation efforts. These data don’t fit nicely into data elements that may be updated in legacy systems once per year.
Michigan Millers recognizes that the legacy systems will represent a barrier in future, and the company is planning a course. “Right now we can meet our speed-to-market strategy, but as we continue to grow, we will eventually need to change,” Jasinski says, adding that there will have to be some changes made in the next few years.
The message here is that the second mouse has a better chance for a painless bite of cheese.
We believe that innovation is a powerful force when it is used correctly. But innovation for its own sake, is like putting the village idiot in the driver’s seat of a Lamborghini. There is a high probability that he will reach record speeds, but we have no idea where the car will end up.
So what do you think?
Are you seeing a balance between innovation and common sense? Are the scales tilted too much in one direction for you?
Let us know below.