CIOs Face Innovation Conundrum

When considering the plight of the modern insurance CIO, it’s helpful to remember that they did assume their posts of their own free will. Otherwise, considering the raft of challenges they face from rapidly changing technologies to tight budgets, one would be tempted to feel pity.

Nonetheless, during a panel discussion at the CIO Insurance Summit in Miami, the assembled members seemed in fine spirits as they wrestled with the question of how they can affect change in their organizations. Much of the discussion centered on what role the CIO should play in fostering technological innovation throughout the enterprise.

John Heidelberger, Divisonal CIO, Guardian Life Insurance Cos., argued that it is not the CIO’s job to prowl the bleeding edge, but rather to find technologies that can be introduced into the enterprise with relatively low risk.

“A majority of what we do in insurance is adopt things we’ve already seen work in other industries – sometimes for 10 years,” he said, noting that the role also entails pushing against the desire to chase technology fads and requests from the business. “What the business is asking for isn’t always what they need.”

Neeraj Arora, AVP of Customer Experience at Farmers Insurance, agrees term “innovation” has a different connotation when applied to the insurance industry. “If you are looking for Steve Jobs-style innovation you are probably not going to get it,” he said.

“But there can be innovation in the way you implement things. For example, the way in which you transition from legacy to newer systems.”

Moreover, innovation need not be especially elaborate or expensive. A few years ago, Arora recalls a team at Framers making use of the platform from virtual world game Second Life to help train claims adjuster on how to assess a damaged vehicle.

Piyush Singh, SVP & CIO, Great American Insurance Group, argued that CIOs need to challenge the technological status quo if they want to furnish the business with competitive advantage. “Consensus is the enemy of change,” he said. “You need people willing to go out on their own. You should be willing to risk your job.”

So how can an insurance CIO ensure enough breathing room to innovate? Heidelberger said establishing a track record and the trust the business is essential. “You want to be predictable. Credibility comes from execution.”

Yet, Singh noted that with the average CIO tenure between three and four years, time is short. Alternately, he suggested insurers might try establishing a skunk works where new technologies can be tried and failures are not catastrophic or career-ending. “We actually structure a portion of our budget entirely for innovation,” he said. “It’s not subject to ROI.”

Indeed, Singh questions the value of the two most famous metrics applied to technology initiatives: on-time and on-budget. “Most of Apple’s best products were late by internal measures. The value a project brings to the business is the best metric.”

Scott Reed, VP, U.S. Insurance Group - Business & Technology Solutions, MassMutual, agreed that insurance technologists have to be forward looking and focused on the business. Reed says part of the job is anticipating business need, noting that he began readying a social platform well ahead of business demand. “Sometimes, you want the business to be asking ‘why the heck is IT doing that?’”

Indeed, it is the need to see around corners that makes the jobs of insurance technologists both challenging and fulfilling. “The future really happens at the intersection of human capital and applying technology,” Reed said. “It’s a great place to spend some time.”