RESEARCH REPORT
Illuminating insurance innovation
Insights from eight years of the Qorus Innovation in Insurance Awards
5-MINUTE READ
August 30, 2024
In brief
- Insurance organizations are increasingly concentrating their innovation efforts on developing new and improved products.
- Most innovation initiatives are successfully meeting or exceeding expectations, delivering financial and non-financial returns.
- Innovators are encountering substantial obstacles such as a resistant company culture and a complex regulatory environment.
Innovation is booming and delivering solid returns for insurers
Insurers are innovating as never before. The evidence is all around us.
The Qorus Innovation in Insurance Awards, launched in 2016 with 225 entries, have to date attracted nearly 3,000 submissions. AM Best has included innovation as a criterion for rating insurers in its reports. And despite the drying up of VC funding, insurtechs continue to make news with their transformative solutions.
To gain a deeper understanding of innovation in insurance, including why and how it happens and what the benefits are, we conducted:
- A generative AI analysis of all the insurance innovation concepts submitted to the Qorus Innovation in Insurance Awards since its inception.
- An online survey with 41 responses from innovation executives representing 28 leading insurance companies in 16 markets, that have consistently submitted entries to the Qorus Innovation in Insurance Awards (many of which have earned recognition).
- Structured, in-depth interviews with 11 senior insurance executives responsible for innovation.
I really think that innovation in insurance is currently a no-brainer; it's a question of life or death. If you don't lead the transformation, you are killed by the transformation.
Jean-Marc Pailhol / Chief Global Strategic Partnerships Officer, Allianz SE
The focus of innovation
The lion’s share of investment in innovation goes to meeting customer expectations, honing competitiveness, and increasing growth and profit. Product development is the most productive area, followed by claims management and marketing and distribution. While life and health insurance are benefitting from innovation, P&C is where most of the action is.
What’s driving innovation?
Our research shows that most innovation today is in response to pressure from customers, competitors and shareholders. Macroeconomic factors play a role, as do regulations – both as a driver and inhibitor of innovation. Emerging technologies are hugely influential – AI, cybersecurity, cloud, open APIs and automation are the technologies which respondents believe will have the greatest impact on insurance over the next three years.
The payback of innovation
80% of our research respondents told us their innovation projects either met or surpassed the financial outcomes they expected. When it comes to their non-financial goals, such as customer engagement and satisfaction, brand strength and employee loyalty, the figure rises to 98%.
Challenges confronting innovators
No one is saying innovation is easy; there are many pitfalls along the journey to scaled deployment. Any one of which could put an end to a promising concept.
The first hurdle is an organizational culture that resists change, is averse to risk and punishes failure. In this context, committed sponsorship can be hard to find and sustain.
The culture of MVP (minimum viable product) is something we still need to work on, accepting that it won't be perfect the first time and requires iteration. There's still some progress to be made, but this mindset is essential for innovation.
Jerome Liegeois / Head of Innovation, Société Générale Assurances
A lack of skills is a crucial inhibitor. Especially valuable is the combination of a clear vision of how an existing process or product can be transformed, and an understanding of how new technologies can help achieve this.
Additionally, insurers looking to disrupt their markets must navigate a complex web of regulations that may restrict innovative practices or require significant adaptation.
Lastly, we found that economic volatility may both impede and spur innovation. In most instances, it reduces firms’ tolerance of long ROI lead times.
Seven enablers of value generation
The senior executives we surveyed shared the enablers of value generation which, they believe, will be ‘decisive’ or ‘very significant’ for innovation over the next three years and the results were as follows:
Sustained value generation enablers
90%
An innovation mindset and culture
Leaders must champion innovation, build a culture that embraces change, and replace all the institutional barriers with enablers and incentives.
90%
Innovative technology
From cloud, and AI, to an array of digital platforms, modern tools have created a wealth of possibilities which can be explored with minimal risk of disrupting operations.
73%
Senior sponsorship
Management needs to lead the innovation strategy with clear short- and longer-term objectives and strong, visible support.
Enablers of growing importance
66%
Innovation funding
By clearly defining expected outcomes of an innovation project, and measuring them closely, insurers will reinforce leadership support and help secure funding.
66%
Innovation talent
Insurers need people who can manage innovation projects from inception through to implementation. Dedicated innovation teams are the route to success.
Routine enablers
51%
Centers of Excellence (COE)
COEs can be a big help in managing the innovation program, identifying the required skills, setting standards, championing progress and best practices.
46%
Innovation partners
Innovation partners can help to advise and equip insurers, potentially providing the skills they lack. It often makes financial sense too.
We actually learned a lot from our employees, especially from our agents, on how we do innovations. We need some ideas and marketing details, most of which come from the people in the market and those handling the business directly. It's important to support them well, provide meticulously designed processes and tools and gather instant feedback from them.
David Wei / Head Office Director of R&D, Ping An Insurance (Group) Company of China, Ltd
Innovating for competitive advantage
Innovation in insurance was historically indulged in the periphery of the business, under-funded and watched with expectations of incremental rather than transformative change in business operations or performance. Today that’s changed. In these fluid times, no insurer can afford to pass up on the cost and service improvements enabled by the torrent of technological advances, or the competitive advantage of being able to respond creatively to changing market demands.