Do You Have the Vision to Innovate?

Google the term “insurance innovation” and you’ll get over 38,000 results.

Probably not surprising, and as you would expect, the results are everything from an actual domain name to consulting groups espousing their ability to transform an insurance company to be innovative.

Will following a “six-step process” get an insurance company to be innovative?

It’s clear that companies want innovation and that consultants are armed to sell their innovation services. The confluence of advanced technologies providing cheaper and easier platforms to facilitate transaction ease and greater client connectivity, combined with margin-squeezing price and product commoditization, is most likely behind this consulting push. However, my sense is that innovation goes well beyond “faster, cheaper, smarter.”

If the supply of consultants meeting the demand of the companies doesn’t get you innovation, then what does?

Get out the “whiteboard” and let’s “flush out” what we can do to be innovative.

Sound familiar? There is no doubt that both brokers and insurers are feeling compelled to be innovative because the status quo is not an acceptable business strategy.

Please don’t misunderstand me. I think many insurers would still view an enhanced “click and bind” as innovative, but I’m thinking about broader innovation. As the industry is known for its “herd mentality,” companies can no longer wait to see what tweaked product and rate their competition has filed so they can follow suit.

Was this ever really product innovation? Is creating a product for exposure to identity theft considered innovative? On one level the answer is yes, but I think the industry now understands, desires and recognizes the need for something more.

Using Intangible Assets

By some measures, the largest tangible asset in both the insurance and technology industries is human capital (even though it’s not itemized on the corporate balance sheet), and intellectual capital is their largest intangible asset. If human capital defines both of these industries, then why is innovation so difficult for the insurance industry but arguably not for technology?

Consistently, when an insurance company is looking to the outside for talent, aside from desiring all the standard qualifications, the request is “in addition, we want someone who thinks outside the box” and “who is innovative.” The demand is there, but where are these people and how do you find them?

Think about Progressive, with a history of innovation that stands apart from the “me-too” dynamics in the insurance industry described above. Progressive was built on a line of business no one wanted with the goal of being the “consumers’ choice for auto insurance.”

How did Progressive develop the idea of being the first to offer customer and claims service 24/7 in the early 1990s? What gave the company the confidence to launch a website in 1995 and then transact to buy a policy online in 1997? How did Progressive understand the power of advertising with consumers?

The answer can be boiled down to Progressive’s investment in its human capital assets.

With visionary leadership at the top, Progressive was hiring top-10 MBA school graduates who had previously been in consumer products but often had very unconventional backgrounds. The company placed these recent MBAs in virtually every discipline: product, claims, customer service, finance, etc. To Progressive’s credit, it was understood that there were plenty of insurance content experts to protect the fundamentals of the business. The influence and confluence of all the experiences of those hired from outside the insurance industry continued to push and drive Progressive to be a leader and innovator in the industry.

Turning to technology, think about Apple. Steve Jobs had a vision of what he wanted his products to be—and as we all know he wasn’t a technologist. He had no degree and couldn’t write code. He was a “visionary” because he applied his love and knowledge of art and design developed in his formative years and pushed his technologists to create heretofore never-conceived products.

The confluence of his background and experiences applied to the technology sector provided an unwavering, crystal-clear vision. Jobs felt the need to demystify how to use technology through “fun consumer experiences,” and Apple’s customers became passionate advocates.

Can you imagine insurance buying being described as a fun experience?

Same Scene, Different Lens

If you think about Progressive, Steve Jobs and other visionaries, is there a common denominator? The one that strikes me is that in order to be innovative, you need the ability to look at the same thing through a totally different lens.

Keep that thought and now think about insurance innovation. The industry was trained to look through a single risk-mitigation lens. How can you expect people who have been rewarded their entire careers for not taking risk and containing risk in a box to now think outside the box?

Progressive understood this premise. Combine great insurance talent with great non-insurance talent and you get innovation. We all know that innovation at Apple was Steve Jobs, and he wasn’t a technologist.

Strong leaders recognize their own limitations and look to those who are not like themselves to push a company to be innovative. It’s the old adage: “Dare to be different.” Take the risk to hire someone who might not be a direct reflection of your own thoughts and ideas.

There is a caveat—you need to hire more than one individual outside of the usual mold, and these hires need support and protection at the top. This industry of ours has a way of killing good talent by a thousand bites. New ideas prompt change, and change can make people who have been in their box feel insecure and threatened.

Think about what it is you are trying to achieve. Hire creatively at different levels of the organization. Good musicians tend to be strong analytically. I know of one property/casualty insurance company that has hired a great musician as part of a product development team—and that individual doesn’t know insurance.

But you can’t expect one person to innovate. Progressive and Steve Jobs certainly didn’t. So this company augmented the musician with a graphic design artist.

These are all nuances that ultimately will challenge a company’s norms. You’ll be surprised what the insurance industry looks like viewed from a different lens. If you have a strong leader at the top who is willing to invest in nontraditional human capital solutions, the result will lead to something innovative.

Contributor

Erin Hamrick, Sterling James

Erin Hamrick is a partner with Sterling James, a New York-based global specialist in executive search and leadership advisory services for the insurance sector, which she founded in 2011. Erin has 18 years of experience serving the insurance industry. Early in her career, before becoming an executive recruiter, Erin served in both line and staff roles at The Hartford and at the brokerage firm Hamilton Dorsey Alston. Reach Erin at [email protected].