“What We Need is a Good Catastrophe”…in Insurance Innovation
I’ve had the opportunity to work alongside commercial property insurance underwriters. This is a very unique group – extremely detail-oriented, whip smart, very black and white, but not given to back-slapping humor or ironic observation. So, when one used the phrase “What we need is a good catastrophe”, it really made an impression on me. He was referring to the fact that property insurance prices were trending downward and a hurricane or tornado would raise them again. In working with insurers on innovation this past year, I feel the same way – the industry needs a good disruption to get it moving. Perhaps today’s speculation about Google entering U.S. insurance will provide a push. Kudos to Ellen Carney @ellenmcarney for doing the gumshoe investigation that uncovered some interesting activity by Google regarding insurance licensing in numerous states (see New York Times http://bits.blogs.nytimes.com/2015/01/08/new-clues-on-googles-plans-for-insurance/
) In a survey last year, we asked 100 financial services professionals about the importance of innovation in their business (Celent subscribers can access the report here: http://celent.com/reports/innovation-financial-services-firms-leadership-gap
). Comparing some of the responses demonstrates that, while many are saluting the flag on innovation, there still is no burning platform in most firms. The details are: Respondents overwhelmingly believe that customer expectations are rising and that innovation is critical if the industry is to keep up:
However, the same group said that innovation is important, but not critical to their business strategy:
So, innovation is critical to respond to customers, but only important to company strategy...a recipe for complacency. The momentum for innovation in insurance is rising, there is increased interest, but it remains to be seen how many insurers will grab the mantle and make innovation a critical part of their strategy. Perhaps a good catastrophe will help.