SMA is observing a noticeable shift in mindset among insurers when it comes to the topic of innovation. So just what is really changing and why is it important?

The insurance industry has a long history of measured, paced change. For many insurers, taking a planned, conscientious fast-follower approach to solution technology investment is still viewed as a viable and preferable strategy. The tactic has been to watch what is working well for peers and then rapidly try to replicate it. The idea is to let others pave the way and suffer the pitfalls.

But, an explosion of technology advances is changing not only what is possible, but perhaps more importantly, what customers expect. Insurers are paying attention and demonstrating bolder initiatives—many expanding their view and learning from others outside the industry.

They are looking for ways to improve the customer experience, bring advanced levels of automation to underwriting and claims, and add more intelligence to operations and planning across the value chain. Many are assigning formal responsibility for finding technology nuggets and novel approaches that will help them drive competitive advantage.

We are seeing more than a few insurers that are actively taking a serious look beyond the traditional boundaries of the insurance industry. They are searching for ways to drive smarter organizations with smoother operations—seeking ways to differentiate and create competitive advantage. They are finding useful examples outside of the industry and are putting them to work in their insurance organizations.

Insurers are learning from the banking industry, as they begin to take ATM processing to the next level with mobile check cashing by using smartphone cameras and imaging software that are similar to the ATM imaging capabilities that exist today.

Insurers are looking at delivering traditional services, such as status inquiry, and combining them with related informative services about topics like safety and home improvement. They are watching the credit card industry, gaining insight on the impact of the proactive servicing they deliver with reminders about billing due dates, links for bill paying, and electronic confirmation of payments. And, they are monitoring the trends among retailers, airlines, entertainment, and other industries that are pushing the envelope in the app world with any-time, any-place, real-time access to information and service.

Leading insurers are making a conscious effort to invest in innovation. They are appointing official groups with the responsibility for taking a strategic technology view and relating it to the business plan. Some insurers have re-established research and development groups within the IT department, naming them innovation groups—talented technology geeks looking for technology enablement and, of course, a business case.

So what does this mean for the industry at large? For those that want to take a leadership position, it means stepping up the pace and moving faster to capitalize on new technologies and new approaches. For those that see a fast-follower strategy as the best course for their organization, it means increasing the agility of IT architectures and the organization itself to be able to make important moves more quickly. And, it means looking beyond the insurance industry boundaries to determine exactly what to follow.

The pace of change is increasing exponentially. All insurers, no matter what course they decide to pursue, will need to stay vigilant and watch what is happening in the industry and around the industry. In the not-too-distant future, playing catch-up may not work as well as it used to. It's a big connected world out there with lots of opportunity … and there are those that will not let it pass.

About the Author

Deb Smallwood, the Founder of SMA, is recognized for her expertise in investing in technology to influence competitive advantage in the insurance industry. She offers a fresh perspective on how business capabilities can be enabled to meet strategic goals. Exclusively serving the insurance industry, Strategy Meets Action blends unbiased research findings with expertise and experience to deliver business and technology insights, research, and advice to insurers and IT solution providers. Deb can be reached at dsmallwood@strategymeetsaction.com.

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