Digital Innovation Is a Puzzle for Life Insurers

December 05, 2019| Von Dan White, Managing Partner, Ninety Consulting (guest contributor) | L/H General Industry | English

Innovation is in the air. Imaginative digital technologies have been plugged into existing Life and Health insurance processes and products in multiple markets, injecting new life into customer engagement, risk assessment and claims management. Except they haven’t. Not yet. Despite the clever digital ideas being built by enthusiastic startups, evidence of their adoption remains scant, with few insurers prepared to take a risk.

This reluctance to get off the mark is puzzling and odd because insurers stand to gain as much from smart investment into innovation as anyone else. Watch or wait? Which is better? At Ninety Consulting, we sought to understand the relationship between an insurance company’s investment into new ideas and its financial performance. The findings we published in a whitepaper earlier in 2019 are positively encouraging for such investment, though with some clear watch-outs.

It’s true that firms that innovate are more likely to produce more growth than those that don’t innovate. Investment into new products and processes both contribute to enhanced financial performance. Yet insurers are shown to be currently under-investing when benchmarked to other heavily digitised businesses. One concern is whether the money invested will indeed positively affect company value and another, more fundamental concern, is how best to engage with innovation partners.

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Compared with newer, smaller companies, well-established insurance firms can spread their innovation risk across larger numbers of customers, offering them a mix of incremental and new products, funding only those innovative technologies that are likely to succeed. Innovation offers the potential for insurance companies to capitalise on changes in social behaviour and regulation, new technologies and digitised processes. Insurance is a knowledge-intensive industry with high barriers to entry. Such businesses tend to enjoy a direct value payoff from investment in innovation that is sustained through both stronger and weaker economic cycles.

Insurers seeking the best returns should align their innovation and business strategies, selecting only the “best” projects to work on. Top-down, company-wide support and incorporating end-user insights are key to the success of those projects. Success also requires lowering innovation risk, cost and delivery times. In the end, what matters most is how companies combine all this to create products and services that connect with customers.

It is, however, a puzzle that can come together. Once the investment, strategy and end-goals are clear, the next step is engaging with technology. Here the greatest gains come from strategic outsourcing. Open-minded insurers should allow collaborators open access to their core skills to leverage the skills of start-ups and related technology. This involves creating a long-term ecosystem running common standards.

A few insurers are independently creating the right environment for innovation to thrive. Others may tap in to the type of preferred vendor ecosystem that is curated by Gen Re. Open collaborations like these two approaches offer the greatest chance to invest with confidence, to think creatively and to execute ideas in a disciplined fashion. The time has come to innovate.


This blog is abridged from a whitepaper published by Ninety Consulting: “Examining the Direct Relationship between Insurance Innovation and Company Value.” You can read the full report on their website.

Ninety Consulting are insurance-specialist innovation practitioners with a mission to help insurers innovate and thrive in a fast-changing world. Ninety is a Social Enterprise, and 90% of the company’s distributable profits go to charity.

About the author

Dan White is Managing Partner at Ninety Consulting. He is involved with Ninety’s thought leadership in insurance innovation and building relationships with global insurers with ambition to be more effective at innovating.


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