Innovation in insurance. It´s the central theme of many industry conferences. There are countless articles and reports advising that the industry must innovate more to remain relevant, achieve long-term financial strength and meet customers´ evolving needs. However, innovation in insurance is often portrayed as difficult to do. There are too many regulations, barriers, legacy technology, not enough support, lack of the right talent, etc.
However, is innovation in insurance that hard to achieve?
This week´s guest on The Voice of Insurance podcast is Tom Hoad, Head of Innovation at Tokio Marine Kiln (TMK), a role he has been in since late 2015. In this episode, Tom shares his knowledge and experience with Mark Geoghegan on how to incubate and deploy new ideas and innovation into insurance. He also discusses the areas he´s excited about, such as dynamic underwriting, IoT, the low carbon economy, and what a sustainable market looks like.
Tom covers so much more in this episode about the art and science of launching new insurance products to the market that if you´re looking to understand better how to innovate in insurance, we highly recommend you listen to this episode.
Starting the discussion, Tom runs through one of TMK´s latest product launches in the clean energy space. Describing the product, Mark asks Tom how his experience has honed the methodology to get projects off the ground; Tom responds, “The system of how you do it is actually quite complicated, and it involves thinking about where you get ideas from, how those themes themselves. So, for example, transition to low carbon economy, or our clients’ adoption of technology and its implications for insurance or indeed short tail non-damaged business interruption but from a range of causes outside of normal property damage. How do you then focus your research into those areas to understand how the clients are dealing with them, and then from that, what do you then do with the cascade of lots of different activities that need to happen to launch a product like the Altelium one.”
What about the actual act of innovation? What does it take to make it happen, asks Mark; Tom replies that he´s not such a fan of the word innovation but rather a fan of the activity surrounding what needs to be done to innovate. Commenting on this, Tom says, “The practice of innovation is really about doing stuff. It´s not innovation; it´s a combination of problem-solving, collaborating, experimenting, and linking between what insurance can do and what our clients want to do to get there.”
Innovation requires filtering through many ideas and suggestions from the business; how does the head of innovation decide which ideas merit attention. Tom discusses that factors such as timing, political issues, or other challenges have to be taken into account. Also, as an innovator, Tom discusses how you have to be strong enough to say that you accept a point someone is making but that it´s not relevant to what the business is doing. Speaking further about this, Tom comments, “So the skill is in taking the knowledge and the expertise from the subject matter expert and then doing an innovation experiment in a controlled way so it doesn´t hurt the organisation if it goes wrong. So that then you can observe and learn from it over time to be perfectly placed to follow that up as it begins to scale.”
Speaking about creating a sustainable marketplace, Tom comments, “Rather than just selling apples, bananas, pears and oranges we should be selling smoothies, we should be selling sliced fruit, we should be selling mixtures of things that no one has ever done before, and frankly, we should be out trying to look for new fruits and vegetables all the time. And that is what I think a sustainable market looks like, and that I think is part of my role to lead the charge on that, not just at Kiln but also in the market collaborating with my peers.”
Enjoy the podcast.
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