Making the Most of the Innovation Ecosystem: Adapting to the New Insurtech World

by Michael Fitzgerald, July 19, 2016
Industry Trends
Global

Abstract

There are a myriad of ways to leverage the external innovation ecosystem. This choice can be difficult to navigate and can contribute to the challenge in developing an innovation strategy. 

 

Some of the largest global insurers are making concerted efforts to align strategy and innovation, but many companies are struggling. This lack of alignment between strategy and operations is one of the factors hindering innovation and is explored in more detail in this report.

“Not all innovation efforts are equal and the lack of clarity on what innovation is needed for a specific insurer undermines efforts to deliver it.” says Mike Fitzgerald, senior analyst with Celent’s Insurance practice and coauthor of the report.

The aim of this report is to expand on factors that impede leveraging the external innovation system, and to outline a method of creating a company-specific framework for leveraging external innovation. This framework takes into account the expectations from an innovation program and company appetite for speed, risk, and return. The report closes with Celent’s predictions on how this space might evolve.

This report is based Celent’s experience with accelerators and on more than a dozen interviews with a range of people from insurer venture capital, venture capital, innovation service providers, system integrators, accelerators, and insurance innovation heads.

This report contains six charts and three tables.

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned operating unit of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

Executive Summary

1

 

Key Research Questions

1

Introduction

2

 

Key Research Questions

2

 

Methodology

3

Taking the Temperature of the Ecosystem

4

Developing an Internal Innovation Decision Framework

7

 

Step 1: Define the Organizational Success Criteria

7

 

Step 2: Define Appetite

8

 

Step 3: Evaluative Innovation Models/Partners Based on Appetite

10

 

Step 4: Develop Your Decision Framework

11

 

Step 5: Launch

12

Factors that Get in the Way

13

 

Failure to Link Innovation and Strategy

13

 

Cultural Differences Between David and Goliath

14

 

Challenging Existing Partnership Models

15

Navigating the Inevitable Roadblocks

18

What Next in the Insurtech Innovation Space?

20

Final Thoughts

22

Leveraging Celent’s Expertise

23

 

Support for Financial Institutions

23

 

Support for Vendors

23

Related Celent Research

24

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