Where are most InsurTech companies innovating right now?
The McKinsey Insurtech Database contains 500 cases of innovation spending within the industry. The data shows that more than half of the cases were focused on innovations in Cloud/SaaS, Machine Learning, and UBI. Other cases included IoT, Robo Advisory, and Gamification.
Most CEOs believe their companies offer a superior experience, and almost all of their customers disagree
8 out of 10 CEOs will tell you that their insurance product or service is fantastic.
However, only 1 out of 10 customers will happily agree with this statement. There is a clear gap in how executives and customers view the experience. This can be understood by collecting data from customers and analyzing it. For example, data on adaptability and user experience could provide insight into where customers face issues with the product or service.
Companies will cease to exist if they do not innovate
Currently, the industry consists of Anticipators, Fast Followers, and Survivors. An astonishing majority of companies fall into the Survivors group, and only focus on short-term performance. For these companies to continue forward, they must innovate and create their own futures. In other words, they must become Anticipators. In attempting to do so, many will become Fast Followers, meaning they will watch industry leaders and mould their strategies accordingly. To become a Fast Follower still takes an innovative approach: companies must be willing to innovate in order to become agile and adapt to changes quickly.
You can become an Innovation Anticipator
The key to becoming an Anticipator is embracing digital innovation. Anticipators focus on implementing digital leadership and creating a digital workplace. Digital business becomes the core of their organization’s strategy. As a result, Anticipators reformulate products and services for the digital customer. In order to succeed at this, these industry leaders collaborate with peers to share data and ideas, and use a Lean Startup approach to test their prototypes out.
70% of insurers believe data from IoT is important – but only 5% actually use it
There is a large number of industry professionals that claim IoT is essential to their company’s strategy. However, only 20% of these insurers actually collect data using IoT, and an even smaller percentage are making use of the data they collect. This valuable data can guide companies on how to innovate to survive, and this will ultimately help them close the gap between company and client perceptions.
If innovation is so crucial, why do organizations only dedicate 5% of their budgets towards it?
Most companies dedicate 95% of investments and resources towards maintaining and improving legacy systems. This budget approach is a result of focusing on short-term problems alone. This leaves very little for innovation, which will ultimately determine a company’s chances of survival in the long-term.
Innovation does not have to be expensive
Everyone knows innovation is important, but there aren’t enough companies working toward it. Most companies assume innovation will impact their budgets extensively. The truth is that innovation does not need big teams and big money. Spaces, such as Cookhouse Labs, use a collaboration approach where a few industry members are brought together with a few resources. Costly mistakes are avoided when different backgrounds come together. The result of combining these diverse experiences is a shared solution that the industry can implement on a budget.
All InsurTech companies want to be Innovation Anticipators, and they can achieve this, too. The secret recipe is collaboration, which combines data, funding, and experience to create big solutions to future industry challenges.
And one day, this co-creation will be successful in making insurance better for the whole industry.
