A few days of rich food, Big Bang Theory bingeing, naps at all hours, and random acts of work can produce some interesting perspectives, one of which is that 2017 is likely going to shape the next generation of insurance processes, distribution, and product. And size will matter, but in a new way.
Dancing with Hippos?
To help companies understand innovation, Craig Haney, Head of Corporate Innovation at Communitech, has come up with the concept of the “Nimble Hippo.” By way of introduction to this critter, Haney writes:
He is our representation of what an agile, nimble, and innovative organization looks like. Nimble Hippos are big, they are smart, they are curious and they ask great questions. They partner where they can. And, finally, they are cool.
Over the last year, Haney’s Hippos have demonstrated required processes, such as open innovation, engagement with external ecosystems, and development of an innovation culture.
But if they can’t dance…
Haney also provides a warning for Hippos which haven’t learned nimble dance steps. The top dysfunctional behaviours are:
- Ask for lots of ideas from the employees, but do nothing with them.
- Jump on the ‘design thinking’ or ‘lean startup’ bandwagon, yet don’t change any of the structure or policies internally which enable them.
- Set unrealistic revenue targets for innovation teams.
- Give one executive the title of Chief Innovation Officer, but provide no support to deliver on the mandate of innovation.
- Talk about innovation and risk taking, but punish those employees who take risks and fail.
Can insurers be nimble?
In October, I attended the KPMG Insurance Conference in Toronto and had the privilege of spending some time talking to Gary Reader, Partner, Global Insurance Sector Leader for KPMG, who provided an interesting perspective on the state of innovation in insurance companies.
Reader made the point that pressures on insurers are coming from “traditional inefficiency” in the industry and the insurers’ reputation for the lack of innovation. Reader noted that InsurTech – defined by Investopedia as “the use of technology innovations designed to squeeze out savings and efficiency from the current insurance industry model” – is not only addressing this, but improving the customer experience.
The fully digital approach is appealing from the stand point of established insurers, but implementation is a real challenge. Reader says that the larger insurers are all in on this, using internal resources as well as third party suppliers. As well, Reader notes that senior executives and board members are actively involved in these projects, due to critical strategic consequences.
This doesn’t guarantee success, but it does provide some certainty that there will be real focus on the tasks at hand.
As well, smaller insurers are becoming engaged with InsurTech service suppliers that support niche products.
And then we have the middle ground….
There are some data, but mostly anecdotal information, that suggest that the mid-sized insurers may be encountering the greatest challenges. These organizations typically have a loyal distribution system, a portfolio of ‘main street’ products, and dedicated internal marketing resources.
This creates a challenge, as limited resources cannot support all lines of business and/or distribution channels simultaneously. Solomon must engage the sword to make unpleasant decisions.
Some good news across the board…
Reader noted that IT departments are not reacting badly to the incursion of outsider InsurTech suppliers (which makes a change from past experiences). Reader suggested that there are benefits to IT if InsurTech suppliers can take responsibilities for new, outward facing applications.
So, what are the implications for 2017?
Earlier in December, I posted on the the rise of the Internet in the late 1990s and the fast stop that the ‘Y2K Bug’ put on its progress in insurance. It looks like we will bypass a similar crash (say I, touching wood). What will define the future of InsurTech for the players is the dedication of internal resources to make and support business decisions.
Our 2017 Insurance-Canada.ca Technology Conference and its sister, the 2017 Insurance-Canada.ca Broker Forum will cover the topics above and many more. As well, you will have opportunities to interact informally with your peers.
Thanks for your support in 2016. Looking forward to working with you in 2017!