Insurance Day Business Briefing: Fear factor needed to drive innovation
Companies must be prepared to take risks – as failure to act is not an option, industry executives say
Insurers and brokers must not be afraid to take risks if they are to encourage innovation.
Speaking on a panel at the Insurance Day Business Briefing, industry executives said companies must be prepared for new ideas to fail. At the same time, however, companies must also fear the repercussions of not acting, they warned.
Nicolas Levillain, head of data science innovation at Exin Group, warned an “element of fear” is crucial for every company when it considers its approach to innovation.
He suggested companies should look to the past to learn lessons from those businesses that have “disappeared” because they were no longer being relevant.
Levillain said the insurance industry must do more to change and innovate or run the risk of being disrupted by external players, adding if companies are not part of the change, they will not be relevant in the future.
Failure to innovate quickly enough could result in disruption by external forces, he warned: “There is always someone stood at the gate, waiting.”
Levillain added: “Companies need to really think about destroying their business, as if they don’t, someone else will.”
James Platt, chief operating officer at Aon Risk Solutions, said to drive forward innovation, companies cannot shy away from taking risks. “We need to take risks, even if some of them fail miserably,” Platt said.
Innovation was crucial not only to reduce overhead costs and modernise market practices, but also to develop new products sought by insurance buyers, Platt said. “Six out of 10 risks clients worry about are what they can’t insure,” he added.
Platt warned by failing to adapt and create new products to meet this evolving demand, the insurance sector runs the risk of making itself obsolete.
Vincent Branch, chief executive of XL Catlin Accelerate, highlighted the importance of companies taking a company-wide approach to innovation, not acting in silos or trying to constrain it to certain divisions.
Branch said creating a “culture of innovation” was crucial within a company, with every employee required to be involved in the process.
With new technologies affecting clients’ risk profiles and altering distribution channels and buying trends, how the insurance market responded was critical.
And he argued it was vital to look outside the traditional spheres of influence. “We need to work with external partners to achieve the cross-pollination of ideas and new ways of doing things,” Branch said.
Paul Merrey, partner in the global strategy group at KPMG, said scale would not necessary be an advantage for London market players when adapting to this new landscape.
While larger companies – both brokers and re/insurers – potentially have larger budgets to roll out new solutions and embed technologies, Merrey said these firms were often plagued by legacy systems.
Smaller companies were often able to operate in more “nimble” manner when adopting new technology and could enact change at a much quicker pace than their larger counterparts, he continued.
“This isn’t the end for the small specialist company, not at all,” Merrey said.