Expert View: Adopting a new mindset for change and innovation

The insurance industry is light years away from its collective, coffee house origins, but do businesses have the right mindset to adapt and take the necessary steps to innovate?

Taking risks and driving change have traditionally required significant capital outlay, making failure a costly option. Under these circumstances, there often isn’t the chance to try out innovative ideas in case they don’t work.

Yet insurers are looking to transform their customer operating model to get products to market quicker and improve customer experience. How can this be achieved in a risk-adverse environment?

The answer lies in adopting a different way of thinking that provides an effective foundation for change and innovation. Software as a Service (SaaS) is an alternative solution that, rather than concentrating on their IT, enables insurers to focus on what really makes them an insurer – such as using data from multiple sources to accurately assess and price risks, and developing their business to retain and attract customers.

As a usage-based model, SaaS enables insurers to dispense with large capital project investment business cases, and instead build change out of ongoing revenue spend on a transactional cost basis. By making innovation part of the ongoing running costs, insurers can do things quicker and cheaper, enabling them to try out new things more often and continually refine them without committing to large investment spend.

Instead of spending, say, £10m on a new system, insurers can try out a hundred smaller projects that each cost £100,000 of operational expenditure. In this low risk environment, there are far more opportunities to be successful, so insurers can afford for some of their projects to fail – and can therefore be more innovative in their approach.

Projects do not need to be perfect before they go live. Insurers can focus on building the core minimum required to go live, enabling them to get into motion quickly and then change and adapt in response to market conditions.

A further benefit is that SaaS doesn’t need to be an all or nothing approach. It enables insurers on mainstream platforms to try out something new in their smaller or niche lines of business that would not traditionally be supported by large amounts of capital expenditure.

With insurers asking for a real alternative to legacy modernisation that provides the capability they want really quickly, research shows at least one-third of all insurers are already fully deploying or trialling SaaS. This means those not adopting this model risk being leapfrogged by innovative approaches by insurer incumbents who will be more dynamic and successful. 

Now looks to be the time to act – without being encumbered by traditional cost and risk barriers.