As we know, the future looks bright for businesses that constantly innovate. But for the insurance sector, innovation is becoming an imperative.
Customers, employees and investors are demanding something new, something revolutionary. Sadly though, Australian insurance companies are often hampered by legacy and are not investing heavily in innovation, regardless of the stiff competition today.
According to a recent KPMG report – A New World of Opportunity: The Insurance Innovation Imperative, less than half of Australian insurers surveyed have invested in innovation. But majority of these companies are taking it easy with innovation, focusing more on expanding their products. Bigger, bolder ideas, however, are left off the table.
Why do insurers fail to drive innovation? Many insurers have grown concerned about their new and more nimble competitors, as these start-up insurers have been creating innovation challenges for the insurance sector.
Moreover, while insurers recognise the need to innovate, they find it challenging to mobilise their organisations. These companies are already struggling to keep up with day-to-day requirements, and most do not have the core skills needed to drive innovation.
In addition, many incumbent insurance organisations are saddled with technology and structural legacy. Old inflexible systems coupled with old processes are common. In addition sales have been long outsourced to the broker channel. This is expensive and reduces the ability to understand and delight customers.
However, according to the KPMG study, there is no “silver bullet” to create an innovative organisation and no “off the shelf” package that will drive ideas. Insurers will have to “navigate their own path” when it comes to developing new models and new strategies.
But ideas are abundant and are bouncing off the shelves. Australia offers fresh opportunities in digital technology, and it can be well integrated with insurance business operations. Having an “always innovate” mindset will help insurers lift their game in the competition.
Compared to retail banking, we have not seen significant “game changing” in the insurance industry. Part of this is due to a lack of a burning platform. There is often a lack of price transparency in insurance premiums which enables pricing to be higher. We believe that this is main reason for retaining the status quo.
It is important to note that customer experience standards are not set by competing insurers. These standards are set by every one else, whether its Google, Apple, Uber or Jimmy The Fruit Seller, Avenue Road, Mosman.