If your firm is like most carriers, it's dedicating considerable resources to legacy modernizations and digital transformations. Although critical, these efforts are relatively incremental in comparison to rapid disruption wrought by the meteoric rise of InsurTechs and the emergence of ecosystems as the new economic world order. However, about half of your leading competitors have decided that incremental innovation isn't enough. That's right. Half. According to Celent's "Insurance Innovation Outlook 2019," just over 50% of these future-focused carriers, regardless of size or type, are pursuing a disruptive innovation approach called greenfield.

Innovation, super-sized

In a nutshell, greenfield initiatives operate as a separate and autonomous entity from the mother ship. Their purpose is identifying and exploiting unmet customer needs in ways that the parent — or the entire insurance industry for that matter — has not been able to. Unhindered by the legacy mindsets, processes and systems of the hand that feeds them, greenfields innovate quickly and freely. They start small, test, learn and adjust until an offer is ready to scale. In this manner, they combine what's possible from a quick new build with the capital resources and savvy associated with an established firm.

Where your traditional book fits in

If you're asking yourself what greenfield means for your existing book of business, rest easy. For the vast majority of insurers, the answer is nothing. At least not immediately. In fact, it's critical to continue developing your existing book without disrupting any of the processes that support your profitability. This includes those important incremental innovations you're already pursuing, like automation or digital experiences. As greenfield is a bet on the future, it's important to continue growing your existing book and innovate within it for the near term. However, the maximum value from your greenfield efforts will occur when you can migrate your existing book onto a greenfield technology platform or launch new business models with it.

Greenfield myths busted

When discussing greenfield with carriers, we regularly encounter two myths that hold insurers back. First, "greenfield" is synonymous with "technology." And, second, greenfield initiatives always involve an InsurTech, whether homegrown or an external partnership. Neither of these myths are true. Greenfields are about identifying and meeting a customer need, with technology as an enabler but not an endpoint. Similarly, greenfields focus on innovation, which may or may not involve an InsurTech. In other words, a firm can incorporate an InsurTech into its legacy world without pursing a greenfield initiative.

Common greenfield paths to enterprise transformation

To leverage greenfield, there are two prominent strategies insurers are pursuing. Which path you choose depends upon your firm's culture and preference. A few companies are even undertaking a hybrid approach, using each strategy for a specific initiative to gain internal expertise and determine which strategy is the best fit.

• Establish a challenger proposition to an existing product or service by building a new offering that gradually replaces, or integrates with, legacy system functionality. As the challenger offering improves customer experiences, it will gain acceptance until it eventually overtakes the existing offering's market share. At this point, the challenger becomes the primary product or service, sun-setting the existing offering. Rinse and repeat across all lines of business and product offerings.
• Act as a catalyst within the enterprise that enables your greenfield team, or teams, to learn how to innovate and then bring the resulting best practices back to the mother ship. From there, you can use your first greenfield to spawn other projects to change legacy processes, attitudes, skill sets, distribution systems and products. Additionally, you can use the first greenfield to create wholly new business models that blend various aspects of traditionally siloed offerings to design novel products and services.

Using either strategy, the initial effort serves as a center of excellence for building expertise across the enterprise. By combining strategy with a robust greenfield technology solution, insurers gain an agile innovative and open platform on which channels and services can be easily configured. In short, with at least half of your future-focused competitors already pursuing greenfield initiatives, if you are struggling to innovate and respond to unmet market needs, the question to ask within your enterprise isn't "should we do greenfield" it's "why haven't we started already?" Anthony Grosso ([email protected]) is vice president of product marketing & industry strategy at EIS Group and the author of The Greenfield Field Guide. Grosso has over 20 years of hands-on experience leading innovation, business development and product management for insurance carriers, financial services and software companies. At EIS Group, which provides a next-gen insurance platform for future-focused carriers looking to launch new digital offerings with InsurTech capabilities, Grosso has served in a multifaceted role from product management to enterprise sales. Prior to joining EIS Group, he led various strategic initiatives at The Hartford. These opinions are the author's own. Also by this contributor:

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