‘The only way to discover the limits of the possible is to go beyond them into the impossible’

Arthur C. Clarke

Insurance, like any other industry, is not immune to this need for development and innovation, yet it tends to traditionally be a little hesitant when it comes to breaking new ground. This presents us with a fascinating conundrum where the traditionally relied-on technologies and processes used in insurance are coming up against the need for new and ever more innovative developments.

As part of Future Processing’s IT Insights InsurTalk series, we recently sat down and chatted with Nic Sproul, Managing Partner at SP.Partners and also the current CCO at I Love Claims and the former Director of Gallagher Bassett.

Fascinated with learning how things work from a young age, Nic initially spent many years of his career as an engineer. Once qualifying as a mechanical engineer, Nic gravitated towards Silicon Valley. Being a huge part of this industry at a fascinating time taught Nic a lot, but after some time, he took the leap into management consulting, where his first client was an insurance claims management company. Since then, Nic has gone on to work with many insurance leaders in the industry, particularly focusing on business management and innovation in the insurance sphere.

In this article, we look into some of the most important insights gained from our conversation with Nic in our latest interview, as well as delve deep into the type of culture companies need to have to encourage and drive innovation in insurance and how it can affect their businesses in the short and long term.

Innovation and creativity are a mindset

Innovation in any industry is driven by individuals – creative individuals. To be creative, it is important to have extremely inquisitive, creative and busy minds that are constantly flowing with ideas, concepts and new creations.

Nic Sproul is certain that it takes a special type of character with a unique set of characteristics to be a true innovator. Serial entrepreneurs who are highly successful in their fields have extremely busy minds. These are the types of people who drive innovation and creativity in companies, and these are the types of people who will fuel positive change in the insurance industry.

Diversity and inclusivity fuel innovation

‘You can’t solve a problem on the same level that it was created. You have to rise above it to the next level’.

Albert Einstein

An easy trap for any company to fall into, not least those in insurance, is to end up hiring people who look great on paper, but who are ultimately all cut from the same cloth. This begs the question, if everyone is of the same background and mindset, how can we reasonably expect innovation to occur?

Richard Watson, an English author, lecturer and futurist best known for his 2007 book, Future Files: A Brief History of the Next 50 Years is a huge proponent of diversity and inclusivity in the workplace in pursuit of creative innovation. His concepts centre around the notion that if a company has the same type of people trying to solve the same problems, then they will most likely get the same solution and lack innovation. However, if the company collates a number of different people from different departments and with a range of capabilities and specialities, the opportunity for innovation is far higher.

To increase the odds of effective innovation, insurance companies should also look to diversify their staff – don’t only hire clones who look the same, talk the same, have the same qualifications, and ‘fit the mould’. They should look outside of their normal sphere of candidates and be prepared to diversify their hires because these types of people could be exactly what the company needs when it comes to innovative breakthroughs.

How can insurance companies accelerate innovation?

The insurance industry is generally quite well known for its risk-averse outlook in doing business, preferring to go with the flow and not against the status quo. But how does this ‘wait and see’ mindset stack up in an ever-changing digital world?

Some of the larger insurance companies are already taking positive strides in the direction of innovation to great effect. One example of this is Charles Taylor InsureTech, a digital technology insurance hub that enables companies to create and launch products, services and digital customer experiences in near real-time, without the need for large amounts of capital investment in the core business systems replacement. Charles Taylor’s goal (and the goal of other similar companies in the insurance industry) is to completely overturn the current status quo. With the right funding and creative innovation, they can, and are, creating next-generational fundamental changes in the insurance landscape whose impact will resonate for years to come.

Insurance companies can learn a lot from companies such as InsureTech. Shareholder value is based on tangible results, and tangible results are driven through shareholder value, which inherently skyrockets when a new and innovative solution is created that changes the face of the industry. Therein lies the challenge – insurance companies don’t want to take risks, but the right risks taken at the right time can be the catalyst for huge change.

Another roadblock to insurance companies affecting innovative change is their attitudes to timescales and results. Innovation is not often a quick and easy process – it takes time, money, and a lot of mistakes along the way. Despite their best will and intentions, any insurance companies with creative aspirations may struggle to prove the results of the time and financial investments bestowed upon them by the company’s shareholders in a short space of time. If the shareholders are expecting mountains to move by the next quarter, they are likely in for a rude awakening.

Instead, companies must understand that innovation takes time and patience. After all, ‘Rome wasn’t built in a day’, so nothing meaningful will be achieved within a single quarter, but, if the company has the viewpoint (for example) of:

– this is the recipe for innovative success.

This mindset change is everything, but it can be a hard sell for investors and shareholders who prefer to play it safe and not take too many risks.

The benefits of cross-functional interdisciplinary collaboration for innovation

As we’ve already discussed, the diversity of staff and knowledge is essential to innovation. Having a range of people with different skills, experience and backgrounds can be a huge positive when it comes to bringing new and creative ideas to the table – this is one of the reasons why new start-up companies function so well as creative idea breeding grounds. However, the issue arises that as the company scales, departments become more defined, job roles become narrower in scope, and the general sharing of knowledge and information declines rapidly.

In fact, in many large companies, certain departments (such as R&D) are completely off-limits to the rest of the company altogether – no one knows who they are, what they’re doing, or what they are working on. This sounds great in terms of purifying the development process in that individual department, but what if that department starts developing a concept that was floored from the beginning? And what if there was someone in a different department who would have been able to spot this immediately and work with the R&D staff to correct this issue before it ever became a mistake?

Departments working in isolation can be a recipe for disaster when it comes to innovation, not least in insurance. Compartmentalisation may be a useful method of operations for the Alphabet Secret Service organisations in the USA, but when it comes to tech and insurance, there are far more benefits from working closely within departments, sharing ideas, swapping information and collaborating together closely.

In insurance, the claims aspect of the operation tends to get overlooked when compared to other departments, yet it is without a doubt responsible for the biggest numbers within insurance companies in terms of claims settlements, payments, and so on. The tide is changing slowly, and insurance companies are beginning to see the benefits of bringing in more innovation when it comes to claims, which is a hugely positive development.

The ‘big picture’ future plans must be done in collaboration

When insurance companies make decisions on the ‘big picture’ issues for their businesses in the industry, it is crucial that these decisions are not taken in silos, but that instead, they are developed in collaboration with the wider organisation. Some insurance companies are already doing this really well, but not all. Future works must benefit the wider organisation, and how can this be assured without actually consulting the wider organisation itself?

Collaboration is the key word to remember. Collaboration is partnership, and partnerships are always stronger than works of isolation. When faced with a huge challenge, working in a collaborative partnership inherently reduces that challenge, making it smaller and easier to deal with. As the old adage goes, ‘a problem shared is a problem halved’. The insurance sector is beginning to take hold and run with this idea in a very positive manner with collaborations increasing significantly, particularly with suppliers. There’s still a way to go yet, but they seem to be on the right path.

Technology and innovation: are they separate or complementary entities?

Embracing new technology is certainly a way to drive innovation. Just because the technology is not new to the world, it might be new to your insurance company, and the way you choose to utilise it might also be new. A good example of this could be insurance companies leveraging new technologies such as AI, blockchain, and OT in order to drive innovation.

AI in particular is a great example of a new technology that is revolutionising not only the insurance landscape, but the entire world. Traditionally, customers used to prefer to either speak to an insurance agent on the phone or even face-to-face in an office. However, this could all change in the near future. Future generations will not deal with an insurance product directly themselves at all.

Instead, they will have a version of them called a ‘digital twin’. This digital twin will be a digital version of you – it will have all of your information, your history, your likes, dislikes, wants, and needs, and it will digitally communicate with insurance companies on your behalf to find out the best deals on your insurance cover possible, optimising your products without you having to lift a finger.

This is a very ‘out there’ but imminently real possible scenario in the insurance world brought about by creative innovation.

Summary

Innovation is great. Innovation is necessary. If we stop innovating, the world won’t move forward. Even in more risk-averse industries such as insurance, innovation is required in order to keep moving forward and developing. Insurance companies are becoming more and more willing to take risks when it comes to innovation and the rewards will speak for themselves. Visionaries are needed in order to drive this creative revolution, diversity is a must, and new ideas should be encouraged, fostered and cradled as they are quite literally, the future.

If you would like to watch our full interview with Nic Sproul, follow this link to visit our IT Insights hub.