As insurance industry carriers, vendors, and assorted observers descended upon Toronto last week for Insurance-Canada’s Technology Conference (ICTC), several questions emerged about the readiness of Canadian insurance carriers to embrace innovations such as Software-as-a-Service/cloud, artificial intelligence (AI), blockchain, and robotic process automation.
First and foremost, it is important not to confuse lack of desire with lack of readiness. Many insurance carriers at ICTC expressed a strong desire to integrate these types of innovations into their operations. Yet, at the same time, these carriers acknowledged that they faced hurdles to adopting innovation.
Cost and antiquated technology are usually the “go-to” scapegoats for carriers when they discuss their inability to embrace innovation. And these were mentioned. However, discussions with carriers revealed far deeper issues of readiness that need to be addressed in regard to embracing innovation:
- Inability to scale innovation across the organization: Carriers that are trying to innovate note that it is being done in pockets in their respective organizations but not on a widespread basis. For example, underwriting may be tinkering with AI, but other business functions may be stuck in 1996 marveling at the wonder of the internet (which was cited by many carriers as their biggest innovative tool).
- Inability of culture to adapt to an unknown and uncertain future: Carriers like as much certainty in their business as possible. Embracing innovation invites a certain level of uncertainty, and this makes leaders at carriers uncomfortable. As a result, sub-C-suite management and their staff are reluctant to introduce anything that might disrupt that level of comfort. This reticence becomes magnified at carriers that are focused on quarterly earnings management.
- Inability to rub stomach while patting top of head: This issue runs part and parcel with the previous issue. Many carriers have a difficult time managing day-to-day operations while trying to introduce innovative processes.
- Dearth of talent: Finally, many carriers concede that they simply do not have the expertise in-house to manage and deploy many of the innovative technologies that have emerged and that continue to emerge.
While this appears to be a grim situation for carriers, several carriers that have had success deploying innovative technologies offered up these bits of advice:
- Outline a broad strategic vision. This is a standard tactic—a firm deciding what it wants its future state to look like.
- Ensure that innovation is connected to strategic vision. Innovation cannot just happen because it might be the flavor of the week or because someone said something really interesting about it at a conference. Innovation has to take place to drive an outcome, not just for the sake of making change.
- Align executive leadership on this vision and establish priorities. Ensuring buy-in at the top levels gives implicit permission for lower levels to fall in line. However, it should not be assumed that the rank and file will automatically fall in line. These employees must be coached to continue to strive for change and hit established tollgates for progress.
- Recognize that change takes time. This is not particularly insightful advice (sort of like telling someone to avoid eating broken glass), but it is useful to keep in mind when roadblocks inevitably appear or when the day-to-day operations sometimes take precedence.
- Focus on outcomes and supporting activities. Carriers should focus not on the stumbles but rather on bouncing back and driving toward those outcomes.
Certainly, carriers have different levels of readiness to embrace and deploy innovations. Therefore, carriers following these suggestions will likely experience a different pace of innovation acceptance. No matter the pace, the more important point is that if carriers recognize that they have to change, any pace of change is better than no change at all.