Can insurers break the innovation barrier?

0 April 14, 2014 at 5:15 am by

I was at a workshop last week with several high-ranking insurance executives where we talked about interesting developments for the future of our industry. Invariably, the topics of innovation, regulation and the conservative nature of the industry came up. I’ve blogged about this before, including pointing to our 2010 study that shows regulation to be a potential (and potent) innovation trigger.

So why is it viewed as an impediment instead of an opportunity? Why, to quote the Competitive Enterprise Institute, has “the [U.S. insurance] industry […] not introduced a single entirely new property and casualty insurance product for individual customers” since 1959? [1]

The discussion reminded me of an experience I had some time ago that was quite an eye-opener. I had been invited to present to a group of students on the topic of “Virtual Worlds in Financial Services”.[2] This group was part of an elite course in financial studies, basically very bright young people who were groomed to become the next generation of leaders for banks and insurers. I have to admit, I was seldom so nervous when preparing for a presentation. After all, I would be talking to millennials, to Digital Natives who had grown up with the Internet, including gaming, social media, virtual worlds and high technological mobility – what was a Digital Immigrant like me to tell them that that they didn’t already know?

I needn’t have worried. Not only did I know a lot more than they did (and not only about the geeky stuff like the history of online games), the lively discussion we had brought a big surprise: they considered the whole thing a big waste of time. Not the presentation, but rather the whole online social interaction thing, especially in a business environment. All were around 25 years of age, few of them were active on Facebook or other services, none of them had ever been in Second Life or played online games. In that room and despite the age difference, I was the Digital Native.

Was does that tell us? My interpretation: the conservative nature of the insurance industry is not easy to overcome when the future leaders bring that mindset to their job. While it is not surprising that insurers don’t recruit their talent from the psychographic which has the most social interaction, the “skeptical support-seeker” (they don’t trust the insurance industry), I would have expected a more mixed selection of other psychographics.

Question to the readers: Granted, the anecdote is a few years old, but do you think that has changed? Can insurers, maybe with the help of young, new talent, break the innovation barrier? How?

 

[1] Granted, that was in 2007 and we have been seeing a lot of usage-based insurance in the auto insurance space, but is that really a game-changing trend yet?

[2] This was about five years ago, when Second Life was still very much a contender for the social interaction space. Virtual worlds disappeared for a while (outside of gaming), but with Facebook buying Oculus they are looking to make a comeback.



Disclaimer
Note: By submitting your comments you acknowledge that insBlogs has the right to reproduce, broadcast and publicize those comments or any part thereof in any manner whatsoever. Please note that due to the volume of e-mails we receive, not all comments will be published and those that are published will not be edited. However, all will be carefully read, considered and appreciated.