Technology Innovation Morphs
Into Core Business Strategy
INSURANCE NETWORKING NEWS IS PROUD to present the 2009 INNovator Awards, a formal recognition of superior performance in business and technology innovation. This year’s winners
were determined by a panel of judges representing INN
staff editors, two well-known and respected industry
experts and INN’s prestigious editorial advisory board
members.
INN would like to thank advisory board members
Eric Bulis, SVP & CIO, SBLI USA Mutual Life Insurance
Co., Ursuline Foley, SVP and CIO, XL Capital/XL Global
Services/XL Reinsurance; Dennis Mehmen, CIO, VP,
Business Information Services, Grinnell Mutual
Reinsurance Co.; Mike Murray, VP, finance, OneBeacon
Insurance Co.; Michael Romano, SVP, risk & administrative services, Highmark Inc., and Anthony Sisti,
information systems director, Travelers Insurance, for
bringing a superior, peer-based review to the process.
In order to share our readers’ expert best practices,
we’ll present the top five INNovators’ case studies in
future consecutive issues. In this issue, we present our
winner’s story.
INN invited the two experts, Mark Gorman, principle with Mark Gorman & Assoc., and Matthew
Josefowicz, director, insurance, at Novarica, to reflect on
the INNovators’ ever evolving and distinctive approach-es to innovation. —Pat Speer
Where was innovation the most strategic for insurers in
light of this year’s economic constraints?
Gorman: A good friend once told me
that when times get tough, the best
strategy is to focus on the basics of business success—increase revenue,
decrease expenses and improve customer service.
Of the five finalists, two are actively working to
improve the customer experience, two are focusing on
reducing expenses and improving productivity in customer-facing processes, and two are leveraging innovation
to maintain their current book or increase revenue
through market expansion.
The question is not what area to best apply innovative
techniques, but what areas make sense for the organization to turn to first.
Josefowicz: It’s said that necessity is the
mother of invention, and this was a year
full of necessities. Insurers needed to run
more efficiently, take advantage of market
opportunities caused by wounded competitors, or re-invent their own product
line and internal processes to meet the demands of a rapidly changing market. I’d say the most important attribute
for INNovators this year has been the willingness to innovate and to invest in agility. If there was one thing that
2008-2009 proved to insurers, it’s that things can change
quickly and that complacency is dangerous.
This is a time of change for the insurance industry: How
can innovation best manage related challenges?
Gorman: A recent study found that during times of significant change, the ability to innovate is directly related to
not only the ability to survive, but to thrive. The study cited
internal and external resources as primary sources of
innovation.
Two of the finalists this year took advantage of internal
resources as a source of innovation by implementing technical tools and disciplined methodologies to support
innovation initiatives. Their success in vetting and applying
these ideas supported growth and profitability metrics, a
marked contrast to a market faced with reductions in premium volume, combined ratios and profitability.
Josefowicz: Of course this depends on where an individual company is starting, but they must be willing to constantly re-examine business processes and product attributes. Insurers need to constantly ask themselves why they
do things they way they do, and if there’s another way
that’s more valuable for customers and profitable.
IT only provides the tools to execute insurance business plans. What is the role process innovation plays in
creating critical alignment between the business and
IT in order to accomplish these objectives?
Gorman: The very demand for, and presence of, innova-
tion, process or otherwise, creates a dialog between business and IT that is critical to business and IT alignment.
The deployment of innovative applications demands
process agility, information transparency, data quality and
infrastructure flexibility. An increase in information made
readily available and actionable, and technology supported and enabled processes for surfacing innovative ideas, all
represent significant utilization of IT capabilities in support of non-traditional business initiatives.
Some of this year’s finalists highlight the benefits of
collaborative initiatives where vendor resources and capabilities can be leveraged for mutual benefit.
Josefowicz: I object to the “only” in the first sentence!
Insurance is an information business, and information
technology is absolutely critical to nearly every capability
that insurers need to deploy. We’re seeing the percentage
of IT groups that are regarded as strategic partners by the
business skyrocket, we’re also starting to see a lot of cross-promotion or merging of roles between the CIO and
COO.
How should insurers consider innovation as they
engage the customer in new ways with new products?
Gorman: Focusing on the customer is becoming more
central to the protection of market share and current book,
let alone strategies for growth. As in the broad market,
organizations that innovate in providing the customer and
clients what they want, when they want it, where they
want it and how they want it, fare well in establishing
market position. This year’s finalists show the benefits to
insurers of doing so as well.
Josefowicz: Customer expectations have probably
changed more in the last 10 years than in the prior 50, and
that has everything to do with the speed and accessibility
of information. Insurers need to make sure they can deliver information to customers on demand through the
channels they want to use. At the same time, there is more
information about customers available to insurers than
ever before, and this year’s INNovator candidates prove
why it’s important to leverage that information in designing and marketing products that meet customer needs for
both protection and comprehensibility.
