While UK insurance in its current state has never been more primed for innovation, the market has also never been more challenging, especially when it comes to generating a strong return on innovation investment in an environment that has struggled to move away from traditional practices.
Carol Bitter, head of commercial strategy at innovation consultancy Fahrenheit 212, presented a series of case studies and learnings on how to increase the predictability of a company’s innovation efforts without compromising on ambition. Here, Carol lists five points of strategy a business should consider when attempting to innovate, and while these points are generally universal and could be applied to most (if not all) business types, we look at what it would mean for insurers should they follow the steps:
- Embrace the paradigm shift – It’s important for insurers to recognise the direction in which their markets are moving and learn to embrace the change. This involves identifying the future and what their role will be in helping to shape the outcome. For example, simplicity and ease of use are preferential traits for modern consumers, especially when looking to engage with a brand, whether it’s to purchase a product or gain access to help and assistance. Therefore, reinventing and simplifying the customer journey is important for insurers to keep their customers satisfied and ensure they are keeping pace with market developments.
- Sweat more at the front, and less at the back – Overall, it’s the products offered that are the most appealing to customers, and while there is currently a concentration on how customers are best served by the systems, platforms and processes in the background (all of which are important), insurers mustn’t lose sight of how their products are benefiting their customers. They must remember that the shop front is the main draw.
- Disrupt the market more than your business – The introduction of new, innovative platforms and procedures to an insurer’s businesses could have a subsequent impact on the original practices, and insurers need to ensure the impacts are positive. If a new development is difficult and misaligns business functions that had already proven successful, it may not be beneficial to the business. For example, a new platform designed to provide insurance customers with access to product specialists for help and guidance would be irrelevant if gaining the access is complicated and arduous.
- Don’t just compete, collaborate – Competition is tough in insurance product markets, particularly in the personal lines, with insurers vying for business from a small and commoditised product pool. However, the commercial space presents more of an opportunity for insurers and other businesses to work together. For example, products such as cyber insurance and directors’ and officers’ cover are relatively new to the UK market, and all of the risks are largely unknown or unaccounted for. Insurers can work with other firms specialising in cybersecurity to gain more of an insight into the market, become aware of new and emerging risks, and learn how they could be mitigated, therefore making it easier to develop and price their own products associated with cyber risk.
- De-risk the bold steps with meaningful small steps – Attempting to achieve too much too soon can be hazardous. Skipping the smaller stages of the development course may increase the risk of the desired outcome failing before completion. An insurer developing a new platform or website from which its products can be bought must ensure the process has been gradual and all of the vital points have been considered before making any major changes, which includes the launch of the new platform itself.
– This article is reproduced with kind permission from Verdict Financial. Some minor changes have been made to reflect BankNXT style considerations. Read more here. Main image: everything possible, Shutterstock.comYou may also like: