Why Insurance Companies Are Racing to Keep Up with FOMO

In an industry characterized by stability and longevity, the insurance sector has often avoided the disruptive forces that have reshaped other industries. However, the winds of change are blowing, and insurance companies are now grappling with the pressure to innovate in response to external factors and emerging technologies.

Here are some key insights from Rob Galbraith, the founder and CEO of Forestview Insights, who has been at the forefront of guiding insurance companies towards embracing innovation and navigating the challenges of change:

1. The Challenge of Embracing Change: The deeply ingrained nature of insurance institutions and the long-standing stability of the industry have made it challenging for organizations to adapt quickly to the evolving business landscape. The resistance to change stems from established processes and organizational structures that hinder the implementation of innovative practices.
2. The Shift Toward Transparency: Over the past five years, there has been a noticeable shift towards transparency in the insurance market. Companies are becoming more open about their innovation initiatives and strategic focus areas. This newfound transparency is reflected in the proliferation of conferences that cater to innovation and emerging trends in the industry.
3. FOMO-Driven Innovation: A significant catalyst for change within the insurance sector is the rise of insuretechs and external pressures from vendors, consultancies, and regulatory bodies. Companies are experiencing a sense of "FOMO" (fear of missing out), prompting them to act swiftly, even in the absence of a comprehensive understanding of the path forward.
4. The Discipline of Innovation: Galbraith emphasizes that innovation should be treated as a core discipline within insurance organizations, akin to underwriting and claims management. While established areas like underwriting have well-defined best practices, the innovation space remains largely uncharted, resembling the "wild, wild west" in its infancy.
5. Navigating the Muddy Middle: Transitioning from ideation to implementation is a critical challenge for insurance companies. Galbraith highlights the importance of having a clear process for innovation that aligns with strategic objectives. Managing the "muddy middle," the often overlooked operational steps between idea generation and execution, is essential for driving meaningful innovation outcomes.
6. Effective Project Management: Companies must move away from a piecemeal approach to innovation and adopt a structured process for evaluating, implementing, and scaling new ideas. Avoiding getting bogged down in ineffective projects and knowing when to pivot or terminate initiatives that fail to deliver results are crucial aspects of successful innovation management.

As the insurance industry undergoes a period of transformation driven by external pressures and emerging technologies, embracing innovation as a core discipline is essential for companies seeking to thrive in the evolving business landscape. By fostering a culture of change, transparency, and strategic innovation, insurance organizations can position themselves to harness the opportunities presented by the shifting industry dynamics.