In the insurance industry, “innovation theater” is a term that’s been used in recent years to describe some organizational initiatives that look and sound inventive or groundbreaking on the surface, but which ultimately fail to deliver on their promise of disruption, growth or efficiency. But moving on from ineffective, performative aspects of innovation activities, doesn’t mean abandoning innovation. To the contrary, most incumbents know exactly how crucial true innovation is when it comes to staying relevant and competitive in today’s digital and insurance market landscape. That’s why it makes sense to begin rethinking how to best align innovation activities with strategic priorities in order to create lasting, sustainable value for our organizations.
Most of us can probably easily conjure multiple examples of “innovation theater” within our industry and organizations. The embracing of certain buzzwords or jargon without fully understanding how to actually integrate these technologies into our operations. The profusion of hackathons, labs, collabs and other well-meaning activities which mostly failed to deliver lasting partnerships or scalable products. While some of these initiatives may have helped start conversations or even influence a shift in internal culture, not enough of them yielded anything deployable or… innovative.
But innovating within the context of the insurance industry’s legacy systems, processes, data silos and regulatory environment can be extremely challenging, making it an environment that’s both ripe for transformation and one where deep innovation can feel quite elusive.
To move beyond “innovation theater,” insurance companies need to take a strategic approach that looks at the entire insurance supply chain and which prioritizes measurable business outcomes.
In addition, insurance leaders must be looking for new ways to integrate innovation continuously into an organization’s core business strategy rather than treating it only as a one-off. Doing so will likely require not just an introduction of new tools, partnerships and processes, but also a top-down change in how leadership talks about and invests in innovation, including how it recruits, secures and nurtures talent, particularly in emerging tech. Cross-functional collaboration should likewise continue to play a huge role in industry innovation, particularly as organizations look to adopt new technologies like GenAI. A proactive approach that stays mindful of existing regulatory frameworks will be essential.
And while much of the focus on data-driven innovations to date have centered around efficiency and pricing, new innovation efforts should deeply consider macroeconomic forces, like difficult markets and climate change realities, in order to adopt tech and develop innovative products that maintain a customer-centric focus. For example, leveraging AI-powered technology innovations to bring products to markets that have been traditionally under-insured.
In a chaotic, rapidly transforming world, insurers have a big role to fill in society and in business: protecting individuals and companies from unexpected losses, promoting economic stability, and fostering growth by transferring and mitigating risks. To continue in this role, insurance innovation is absolutely essential, but it needs to be authentic to the organization. Insurers must, therefore, be willing to confront some of their most long-standing inefficiencies, including legacy systems and processes, which may represent very real roadblocks to change. Doing so will pave the way for strategic implementations that produce more successful outcomes and far less “theater.”