Is the insurance
industry sending the brilliant minds elsewhere? Does an industry-wide culture
exist that rejects true innovation…..you be the judge.
Apart from a few
shining examples, genuine innovation, risk taking and true creativity is
clearly lacking when it comes to the investment needed in systems and
technology. Insurers can’t attract the brilliant minds in the same way Big Data
and Tech companies can because the culture doesn’t embrace
innovation the same way.
Talent is the
most important part of any organization yet the current (and future) talent
deficit in insurance is only moving in one direction as demand outstrips
supply. Sure, there are plenty of smart and intelligent individuals achieving
exceptional outcomes in broking, re/insurance and MGA’s but they are the
exception, not the rule.
How many
colleague graduates with a business or technology qualification are choosing a
career in insurance? By the very nature of the insurance industry, there is
limited reward for innovation, doesn’t encourage risk taking and doesn’t invest
nearly enough in people & technology.
A 2019 article
posted in The Economist provides some supporting evidence (below):
- No insurer ranks among the world’s top 1,000 public companies for R&D investment – yet dozens of insurers are in that top 1,000
- On average, insurers allocate 3.6% of revenue to IT —about half as much as banks
- In a study of 500 innovation topics across 250 firms, many insurers are working on the same narrow set of ideas
Tough to attract
talent to an industry that invests half of what the banks do in technology, or
where all competitors refer to innovation for essentially the same set of
narrow topics. It can be argued that the big primary insurers may be vulnerable
to Big Data and new (large) market entrants like an Apple, Google or Amazon.
Billions to invest, innovation leaders and able to attract the sharpest minds.
Search and
leadership advisory firms such as Hanover are increasingly being asked by
insurance clients to “think outside the box” (and the industry) to identify top
talent with transferrable skills and an understanding of risk management. For
example, senior leaders in the tech sector have switched to insurance companies
in areas such as cyber and technology insurance.
If we look at
the way the world has changed in the past few weeks due to COVID-19, one thing
that the current crisis has revealed is the growing relevance of e-trading,
particularly for renewals. Brokers and underwriters alike regularly complain
about the inefficiency of conducting business by traditional methods, and yet
until this year the insurance industry appeared no closer to market-wide
digital placement than it did five years ago.
The market is
overdue for significant disruption (which is coming), but if the industry is
able to attract top talent for more evolving hybrid positions (risk &
technology) the time for innovative transformation is still available.
