For many of those outside – and even inside – the industry, insurance and innovation may not seem to go together. Yet, rather quietly, most large insurers have been ramping up their innovation spending over the past decade.
This is largely in response to the rise of more agile insurtech startups and to deliver complementary services like healthy lifestyle apps, data-driven pricing operations, transparency in policy specifics and other value-added consumer technologies.
While this is a good start, it isn’t enough to keep the industry on the stable footing it has enjoyed for generations. Recent difficulties in settling claims from the COVID-19 pandemic are only the tip of the iceberg. Thanks to climate change, large swaths of the global P&C insurance industry are coming into the crosshairs of generational change. The effects of our warming planet have begun making whole categories of property assets borderline uninsurable. As the effects get worse, the strategic options will only get tougher.
If insurance companies innovate in ways they already understand – tweaking their underwriting policies, pushing harder on claims or other ‘surface’ improvements – they’ll find themselves fighting over smaller pieces of a shrinking pie.
