For many in the insurance industry, the past 18 months have been the tipping point. As we gradually make our way back to normality, insurers have recognised that the key to economic recovery, growth and long-term success is innovation.
But what is innovation? It is a word often used in business, but rarely defined.
Many insurance companies claim to ‘be innovative’, but this often means they have simply adopted the latest technology. This is an easy way for businesses to claim they are doing things differently, but doesn’t necessarily lead to better customer experiences.
We believe true innovation comes from improving products, processes and customer outcomes.
Whether it be a digital quote and buy journey, or a user-centred approach to claims handling, improving the experience of the end user should be the objective.
Towards a more systematic approach to defining innovation
In March of 2020, global credit rating agency, AM Best, began formally scoring and assessing innovation as a rating variable to aid in evaluating the financial health of insurance companies.
The agency defines innovation as “a multistage process whereby an organisation transforms ideas into new or significantly improved products, processes, services or business models [either created organically or adopted from external sources] that have a measurable positive impact over time and enable the organisation to remain relevant and successful.”
Why do we need a clear definition of innovation?
Defining innovation is the first step to understanding how to make it happen. How can a business promise to deliver something if they don’t know what that thing is? Treating innovation like any other business metric – something tangible that can be categorised, measured and managed – is the first step.
And this clear, concise definition provides a basis on which all businesses can plan, measure and judge their innovation activities.