How Insurers Can Promote a Culture of Innovation To Better Serve The Small-Business Market
Mar 15, 2023 Carriers
Mar 15, 2023 Carriers
How Insurers Can Promote a Culture of Innovation To Better Serve The Small-Business Market
Businesses are increasingly looking for more personalized insurance products, accelerating the need for change in an industry not known for fast or even consistent innovation. However, the economic climate, customer demand, and new competitors mean that insurers must make innovation a top priority to maintain current success and achieve future growth.
Insurance companies that achieve and sustain a culture of innovation weave it into the very fabric of their organizations. To profitably meet the often fast-changing demands of their small business customers, insurers must be innovative in how they work and compete.
Change management is never easy or simple. Insurers seeking to upgrade their culture to one that emphasizes innovation often fail to translate upper-management intentions into real changes in business processes.
With that in mind, here are five actions insurers can take to create a high-performing culture of innovation, including tips on tracking progress and measuring success.
Innovation is a process of identifying unmet needs and creatively addressing them. This requires a combination of executive mindshare, human capital, and physical assets.
Capacity is what tends to hold insurers back from innovation. Just keeping existing systems maintained and updating existing products with incremental changes requires a great deal of time and effort.
To create a culture of innovation, insurers should reallocate resources from core tasks to innovative, potentially disruptive initiatives that can move them toward new, highly profitable business models and a world of opportunity.
Insurers must develop processes specifically to produce and manage innovative products. Unlike more traditional product development processes such as derisking and acceleration, these might include the following:
By separating these development tracks, insurers can pursue a culture of innovation that creates sufficient capacity for developing new or significantly upgraded products with the potential to expand value or open new markets. At the same time, they can maintain market share for existing products.
To deliver a differentiated experience to customers and distribution partners, insurers must integrate customer engagement and distribution/marketing with insurance protection. The changing customer landscape now rewards insurers that deliver a more personalized user experience by:
To achieve clear metrics for success, innovation teams maintained by insurers with a culture of innovation are integrated into the insurer’s routine business-planning cycle. To use a typical example:
Often found in companies with a culture of innovation, an accelerator is a separate entity created to drive product innovation. They are charged with achieving a precise amount of growth to fill gaps in the insurer’s growth strategies, measured through strict KPIs and outcomes.
Accelerators are connected to areas of strength in the company (product, underwriting, digital distribution, etc.) to take advantage of those capabilities while independently exploring disruptive, higher-risk opportunities.
A culture of innovation uses strong leadership, autonomy, curiosity, collaboration, and funding to empower change. In companies with an innovative culture, people engage with customers, respond to their rapidly-changing expectations, and ensure that decision-making reflects a willingness to embrace new ideas.
By following these five actions, insurers can set the stage to take bold, innovative actions that capitalize on market opportunities and serve their customers better.