Today, technology is empowering underwriters with remarkable ways to meet the needs of clients.
The insurance industry has been around for more than 300 years. During that time, there hasn’t been much innovation in insurance— until relatively recently.
Now, decision-makers in the insurance industry are starting to embrace the benefits of innovation. However, many leaders are left wondering how to step up their game.
Furthermore, they’re struggling to keep pace with trends, customer expectations, and emerging risks. Rather than viewing these items as obstacles, however, some firms are using them as an opportunity to reinvent themselves.
To learn more about how the insurance industry is leading the way in innovation, continue reading.
Getting Perspective on Innovation in Insurance
New products are a vital part of innovation. However, it’s not the only part of innovation that matters.
For example, there are opportunities for innovation beyond new products in the insurance market. Insurance execs can innovate on the services that they offer clients. However, they can also look at how they deliver those services.
For example, modern consumers use a mix of cool, new gadgets. Forward-thinking insurers have learned that the place to reach their audiences is on those devices.
Moreover, they’re learning how to make insurance, well—fun. Nothing highlights this point more than the wealth of insurance commercials that might rival your favourite sitcom.
There’s great potential for innovation in the insurance industry. Yet, that potential may not lie in traditional means of innovation.
What’s important is that decision-makers take a more active part in the innovation process. Still, this role doesn’t always require that decision-makers take on the role of an innovator.
Often, it’s difficult to develop innovation in a silo. For this reason, it’s better to involve brokers and clients in the innovation process. Moreover, it’s highly beneficial to form a partnership with third parties who excel in helping companies to develop innovation.
A third-party consultant can help you to shape your insight. More importantly, they can help you develop your vision into a tangible result.
Getting Innovative: Shaking up Your Brand
Today, the insurance marketplace is highly competitive. Companies that fail to innovate face the risk of becoming irrelevant. As an example, many insurers are embracing telematics to avoid this untimely fate.
Underwriters who fail to adapt to a changing industry will most likely lose market share. Furthermore, they’ll take greater risks with policyholders—without receiving compensation.
In addition, stagnant firms will find that their partners miss out on considerable profit. This loss can occur across both personal and commercial insurance lines.
Conversely, underwriters who embrace innovation will experience positive change. For instance, actuaries have historically used models that leverage static information.
This information may include data points, such as credit scores. It may also include a policyholder’s age. However, these metrics are only proxies for risk.
Imagine providing coverage for two drivers with vastly different driving behaviours. Using traditional actuarial methods, you might calculate that they present the same risk.
Contemporary insurers, however, take advantage of technology such as telematics. The technology enables insurers to observe real driver behaviour. In turn, it allows them to assess real risk.
In this scenario, the age or demographics of clients are irrelevant. You can price a policy appropriately based on an individual’s driving behaviour using telematics.
Furthermore, telematics technology supports automated emergency calling. This feature helps to reduce bodily injury. Telematics also allows insurers to streamline the claim process and reduce fraud.
Benefits of Insurance Innovation
There’s an ongoing theme that exists across both commercial and personal automotive insurance lines. These lines have a reputation for low—and in some cases negative—underwriting profits.
For this reason, there’s increasing industrywide pressure to reduce claims. There’s also growing pressure to reduce related costs and reduce combined ratios. Technology such as telematics helps insurers to meet these goals.
When drivers know they’re being monitored, they drive more safely. However, telematics also delivers personalised feedback.
For these reasons, telematics also helps to reinforce safe driving habits. In doing so, it helps to reduce the frequency and severity of insurance claims.
This kind of technology will revolutionise the way that insurers engage with policyholders. It’s also helping to increase client acquisition. Furthermore, it’s helping to boost client retention.
Both of these characteristics are critical. They help insurers to grow their premiums. They also help underwriters to generate profit.
Technology bolsters acquisition and retention significantly. In the end, insurers who fail to adopt new technology will get left behind by their competitors.
How a Favoured Drink Became a Fintech Powerhouse
Fintech insurance innovation is creating quite a disruption. In fact, the fintech space is reshaping the insurance industry.
Now, technology companies are slowly siphoning market share away from traditional insurers. For this reason, insurers must adapt or face becoming obsolete.
Historically, the insurance industry has been the slowest in adopting innovations. Meanwhile, the fintech space is full of innovative concepts and insurance development firms. Lemonade is one such company.
Lemonade offers renter and homeowner insurance. The company is a great example of home insurance innovation. Besides, who doesn’t like lemonade?
Lemonade offers several products. For example, the firm supplies insurance for:
• Loss of use
• Personal property damage
• Personal property theft
• Reconstruction costs
However, there’s one major caveat. Lemonade is a tech company that sells insurance, rather than an insurer that’s embraced tech.
Lemonade subscribers use the company’s mobile app to register and sign up for coverage. Clients file claims using an in-app chatbot. The app eliminates paperwork completely.
The app relies on an AI-powered framework. The technology enables the provider to process claims in as little as three minutes. Sometimes, Lemonade can process claims even faster.
Once the company has processed a claim, the user receives a notification automatically. In some cases, Lemonade has processed an entire claim in under 30 seconds.
Lemonade is also innovative with regard to its marketing tactics. Everything about the company appeals to up-and-coming generations of potential new clients. By offering services in a way that appeals to Millennials and Generation Z, Lemonade has successfully captured a considerable share of the insurance market.
Moving Forward with Innovation
In this environment, it’s important for insurers to investigate ways to develop innovative ideas. In doing so, decision-makers can maximise their creative potential. They can also figure out how to see their vision to fruition.
Today, companies have a tenth of the life expectancy of their centennial predecessors. This statistic suggests that the competitive business environment moves much faster than it did in the past. Now, companies that fail to keep pace with changes get left behind.
Today, most innovative insurance companies launch successfully on the heels of a new idea. However, stakeholder sentiment tends to change after achieving success.
When this happens, companies become defensive. Instead of seeking innovation, they work solely to maintain their share of the market.
In time, these firms lose ground to a new round of innovative companies. In many cases, the competition puts these firms out of business.
You can avoid this fate by embracing innovation. Today, innovation is more than a buzzword—it’s a business essential.
It’s important to understand that an idea is not an innovation until it solves a problem. For this reason, it’s important to develop an innovation correctly.
It’s vital to test innovations in different ways. It’s also important to test them rigorously.
By taking these steps, you can verify that an idea is viable. Furthermore, you can determine if it’s desirable.
Partnering for Innovation Success
Only a small percentage of executives are satisfied with their organisation’s innovation. Nevertheless, most executives identify innovation as a key growth strategy. In many cases, however, developing innovation is easier said than done.
For this reason, it’s often beneficial to partner with an innovation agency for insurance. A skilled consultant can help your firm to make innovation a priority. More importantly, they can help you to turn your innovative concepts into reality.
An innovation consultant can help you to plan your initiatives carefully. They’ll start by helping you to identify your needs.
For example, they’ll help you to understand what you need to develop. You may need to develop innovative insurance products. On the other hand, you may want to develop ideas for travel insurance innovation.
Alternatively, you might need to develop your team. You may even want to cultivate an insurance innovation lab.
Either way, a consultant can help you outline your goals clearly. Next, they’ll help you to choose the right resources to help you meet your goals.
Ultimately, an innovation consultant will help you to develop a clear and concise mission statement. With your mission statement, you’ll better understand the role of innovation in helping your firm to achieve its objectives.
Let Us Show You the Path to Innovation
Now you know more about innovation in insurance. What you need now is a consultant who can help to put you on the right path.
Danger Farms can help you to merge innovation and best practices at scale. We’ve launched award-winning products that help companies of all sizes do more with their ideas. Whether you need to develop a new software product or come up with a way to make your brand pop, we can help you get there!
We’re ready to help you through your entire digital journey. We’ll guide you from concept to design, through creation, and throughout growth.
Contact Danger Farms today to learn more about finding opportunities to transform your business.