Insurance Networking News is proud to present the 2009 INNovator Awards, a formal recognition of superior performance in business and technology innovation. This year's winners were determined by a panel of judges representing INN staff editors, two well-known and respected industry experts and INN's prestigious editorial advisory board members.
INN would like to thank advisory board members Eric Bulis, SVP & CIO, SBLI USA Mutual Life Insurance Co., Ursuline Foley, SVP and CIO, XL Capital/XL Global Services/XL Reinsurance; Dennis Mehmen, CIO, VP, Business Information Services, Grinnell Mutual Reinsurance Co.; Mike Murray, VP, finance, OneBeacon Insurance Co.; Michael Romano, SVP, risk & administrative services, Highmark Inc., and Anthony Sisti, information systems director, Travelers Insurance, for bringing a superior, peer-based review to the process.
In order to share our readers' expert best practices, we'll present the top five INNovators' case studies in future consecutive issues. In this issue, we present our winner's story.
INN invited the two experts, Mark Gorman, principle with Mark Gorman & Assoc., and Matthew Josefowicz, director, insurance, at Novarica, to reflect on the INNovators' ever evolving and distinctive approaches to innovation. — Pat Speer
Where was innovation the most strategic for insurers in light of this year's economic constraints?
Gorman: A good friend once told me that when times get tough, the best strategy is to focus on the basics of business success - increase revenue, decrease expenses and improve customer service.
Of the five finalists, two are actively working to improve the customer experience, two are focusing on reducing expenses and improving productivity in customer-facing processes, and two are leveraging innovation to maintain their current book or increase revenue through market expansion.
The question is not what area to best apply innovative techniques, but what areas make sense for the organization to turn to first.
Josefowicz: It's said that necessity is the mother of invention, and this was a year full of necessities. Insurers needed to run more efficiently, take advantage of market opportunities caused by wounded competitors, or re-invent their own product line and internal processes to meet the demands of a rapidly changing market. I'd say the most important attribute for INNovators this year has been the willingness to innovate and to invest in agility. If there was one thing that 2008-2009 proved to insurers, it's that things can change quickly and that complacency is dangerous.
This is a time of change for the insurance industry: How can innovation best manage related challenges?
Gorman: A recent study found that during times of significant change, the ability to innovate is directly related to not only the ability to survive, but to thrive. The study cited internal and external resources as primary sources of innovation.
Two of the finalists this year took advantage of internal resources as a source of innovation by implementing technical tools and disciplined methodologies to support innovation initiatives. Their success in vetting and applying these ideas supported growth and profitability metrics, a marked contrast to a market faced with reductions in premium volume, combined ratios and profitability.
Josefowicz: Of course this depends on where an individual company is starting, but they must be willing to constantly re-examine business processes and product attributes. Insurers need to constantly ask themselves why they do things they way they do, and if there's another way that's more valuable for customers and profitable.
IT only provides the tools to execute insurance business plans. What is the role process innovation plays in creating critical alignment between the business and IT in order to accomplish these objectives?
Gorman: The very demand for, and presence of, innovation, process or otherwise, creates a dialog between business and IT that is critical to business and IT alignment. The deployment of innovative applications demands process agility, information transparency, data quality and infrastructure flexibility. An increase in information made readily available and actionable, and technology supported and enabled processes for surfacing innovative ideas, all represent significant utilization of IT capabilities in support of non-traditional business initiatives.
Some of this year's finalists highlight the benefits of collaborative initiatives where vendor resources and capabilities can be leveraged for mutual benefit.
Josefowicz: I object to the "only" in the first sentence! Insurance is an information business, and information technology is absolutely critical to nearly every capability that insurers need to deploy. We're seeing the percentage of IT groups that are regarded as strategic partners by the business skyrocket, we're also starting to see a lot of cross-promotion or merging of roles between the CIO and COO.
How should insurers consider innovation as they engage the customer in new ways with new products?
Gorman: Focusing on the customer is becoming more central to the protection of market share and current book, let alone strategies for growth. As in the broad market, organizations that innovate in providing the customer and clients what they want, when they want it, where they want it and how they want it, fare well in establishing market position. This year's finalists show the benefits to insurers of doing so as well.
Josefowicz: Customer expectations have probably changed more in the last 10 years than in the prior 50, and that has everything to do with the speed and accessibility of information. Insurers need to make sure they can deliver information to customers on demand through the channels they want to use. At the same time, there is more information about customers available to insurers than ever before, and this year's INNovator candidates prove why it's important to leverage that information in designing and marketing products that meet customer needs for both protection and comprehensibility.
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