Other parts of this series:
- Innovate or downscale: the insurer’s dilemma in the digital economy
- It’s time to challenge the old orthodoxies that are stopping insurers from becoming innovators
- Here’s how insurers can transform themselves into innovators
- These digital technologies need to be on the watch-list of every insurer
- Insurers must learn the golden rule of innovation – collaboration is crucial
- Experience required: Insurers need to delight their employees as much as their customers
Insurers are facing increasing competition from well-funded start-ups. But carriers’ attempts to respond by becoming more innovative are often stifled by outdated business orthodoxies.
The insurtech boom has propelled innovation onto the agendas of executives at major insurers throughout the world.
Rising competition from scores of highly-focused and well-funded start-ups is forcing insurance providers to find new ways to improve efficiencies, serve customers and increase income. No longer can insurers just focus on defending their traditional markets. If they don’t match their rivals in innovation they’re going to quickly lose business.
During 2015 investors poured around US$2.65 billion into insurtech start-ups – up from $740 million the previous year, according to researcher CB Insights. And this funding looks set to continue climbing in 2016.
Many long-established insurers are struggling to change their businesses to encourage greater innovation. One of the biggest obstacles, according to delegates at the recent Digital Insurers Network (DIN) meeting in Paris, is the prevalence of stifling business orthodoxies. Such orthodoxies, or conventional wisdom, narrow the thinking of business leaders and blind them from seeing new opportunities. They can inhibit insurers from using new technologies, products, processes or approaches to gain competitive advantage.
Traditional business orthodoxies are deep-rooted throughout much of the insurance industry. The DIN delegates identified many such orthodoxies that are impeding insurers. They include:
- People need insurance.
- Insurance is sold, not bought.
- Regulators won’t let insurers change.
- Insurers won’t get disrupted because they’re regulated.
- Legacy systems stop insurers innovating.
- Claimants are likely to defraud their insurers.
- The complexities of insurance keep other firms out of the market.
- Insurers understand their customers’ needs better than they do.
Do these statement look familiar? Perhaps you’ve some of your own examples? They’re all obstacles to change and barriers to innovation. And they all need to be challenged.
The business environment that spawned such sentiments is long gone. New technologies, new market trends, and new customer attitudes have opened an enormous range of possibilities. The first step to capitalizing on these opportunities is to change the mindset of business leaders and workers throughout the organization.
In my next blog post, I’ll discuss some key methods of fostering a culture of innovation. If you’d like to find out more about the DIN please email: email@example.com.