There’s good news and bad news when it comes to innovation in the insurance industry. The good news is that innovation is taking place—much of it led by genuinely committed innovators who see a bright future before them. The bad news is that much of what passes for “innovation” in the industry is probably more akin to incremental improvement. And that kind of incremental improvement may not be enough to sustain companies through coming market disruptions.
These insights and others are presented in a new report from Celent entitled Innovation Outlook 2015: Practitioners' Predictions. The report, which was authored by Celent senior analyst Mike Fitzgerald, is based on a survey of innovation leaders inside and outside the insurance industry. That survey investigated the outlook of enterprise innovators to the coming year and found that 80% anticipate increased threats of disruption from outside the industry. In addition, 90% believe customer expectations will continue to escalate.
Despite this view of the future, more than 93% of respondents described innovation efforts at their company as being primarily incremental. And very few are investing in new start-ups or spin-offs from their main business.
This suggests that, despite the best efforts of these innovators, their companies are likely to remain vulnerable to the kinds of changes they see coming.
“There’s definitely a disconnect between what industry leaders say they see happening and what they’re actually doing in response to what they see,” said Fitzgerald. “On the other hand, it is encouraging to see that innovation programs are in place—which suggests that companies at least have the potential to ramp up their innovation efforts if they can overcome the factors that currently inhibit them from doing so.”
According to Fitzgerald, foremost among those factors are the day-to-day demands of the business and general corporate inertia (i.e. “We’ve always done things this way”). Other factors include focus on shorter-term ROI and the lack of structural mechanisms for encouraging and executing on innovation initiatives.
Survey respondents also see talent as a limiting factor, with 57% asserting it would get even harder in 2015 than it was in 2014 to find people with the skill-sets necessary to move the needle on innovation.
