Insurers’ investment in technology focusing on modernizing core systems: SMA

There is pressure to innovate in today’s fast-paced and changing insurance environment and insurers are responding by focusing their investments in technology on modernizing core systems, notes a research report released Wednesday by Strategy Meets Action (SMA).

The report, Innovation in Insurance: Expanding Focus and Growing Momentum, highlights the continued progress in and around innovation with expanding focus and accelerating momentum, notes a press release from SMA, an insurance strategic advisory firm.

SMA argues that the focus on modernizing core systems recognizes “it is a foundational requirement for innovation and table stakes for entry into the leader positions in the market.”

The research further indicates insurer willingness to bring in “outside-in views by engaging open innovation and developing an ecosystem of outside resources,” notes the press release. This shift reflects “the demands of the digital revolution and outside-the-industry influencers that are increasing the focus on developing new products and engaging and strengthening customer relationships.”

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Almost a third of insurers have their strategy or R&D leadership/areas lead innovation, the research shows. “SMA believes this reflects the resurgence of strategy and R&D efforts to provide an enterprise-wide approach for innovation that maximizes the strategic impact and value of innovation initiatives for the organization’s Next-Gen Insurer vision and strategy,” it adds.

SMA reports that innovation drivers have been reprioritized as a result of the shifting landscape of the influencers of, threats to, and competitors in the insurance industry. It points out that of the innovation drivers, enabling growth (42%) and profitability (30%) have moved to the top.

The majority of insurers have focused on innovation for more than two years, and many for more than five years, “highlighting the growing momentum in the industry that will delineate market leaders and movers from the rest of the industry,” SMA founder Deb Smallwood comments in the press release.

“A new future is rapidly unfolding, and the pressure to innovate is on, as reflected by the significant number of insurers focusing on innovation,” adds SMA partner Denise Garth. “Each and every day, insurers must recommit to their innovation journeys and their innovation cultures, to gathering outside-in views and to avoiding falling into operational traps,” Garth contends.

The 16-page report answers the following questions:

• Who is leading innovation within companies, and how long have insurers been focused on innovation?

• What are insurers’ approaches to technology implementation and investment?

• To what extent are insurers engaged in open innovation and building ecosystems?

• What groups are involved in insurance ecosystems?

• What are the business drivers for innovation?

• What business areas are most innovative today, or in the beginning stages of innovation, or just beginning to look at future opportunities for innovation?

• What industries are influencing innovation today and over the next three years?

PHOTO: Deb Smallwood, Founder, Strategy Meets Action