Innovation in Insurance Technology? Dont Hold Your Breath
Insurance Experts' Forum, February 18, 2010
Just about everyone dreams of making that big splash, that big score or that big impression that catapults themselves into fame, stardom, renown and/or lots of money. Just ask the thousands who waited for days at each of the audition sites for a chance to sing for 20 seconds in front of the American Idol judges.
The factors that drive people to pursue such dreams undoubtedly vary from individual to individual, but one commonality stands out—each of them is willing to sacrifice something and to risk rejection and humiliation (does anyone really relish the thought of being publically dissected and embarrassed by Simon Cowell?) in order to reach that pinnacle.
When you come right down to it, most of the “big hits” in life come about after someone decides the risk is worth the reward. Looking at the technology sector, we have seen careers and empires built by the likes of Bill Gates and Steve Jobs and others who were willing to take chances.
What got me thinking about all this is a recent article by Rod Travers, executive vice president of Robert E. Nolan Company, which appeared last month in Insurance Networking News and in Nolan’s newsletter. Rod talks about the idea of “elegant design” in technology—meaning products and processes that are simple, intuitive and technically economical. He cites a number of examples, including the iPhone, Amazon’s one-click buying process, and Twitter, et al.
Rod suggests that we in insurance and financial services have a “tremendous opportunity to incorporate elegant designs into service processes, including self-service and agent-service processes.” He notes, correctly, that a few high profile players in our sphere have made such incorporations and that their success has been “phenomenal.”
But let’s not get carried away here. A review of our industry’s history with technology reveals that—at least over the last 30 years—insurance has not been a hotbed of innovation. In fact, it would be fair to say that we are among the last to adopt virtually any hot new technology—which actually saved us from much financial pain in the dot-com boom and bust.
Yes, some companies have started using some of the latest technology tools, but no one pretends that they were among the first companies anywhere to do so. We want to make sure something works, and that it works over a sustained period of time, before we even consider making it a part of our enterprises. Insurance is all about avoiding risk—not taking a flyer on some wild and exciting idea that could end up costing a lot and yielding nothing. And incidents like the failure of CRM—which was widely bought and adopted in our industry some years ago—provide insurers with sure evidence that risking significant investment in technology can come back to burn you.
The insurance industry and the world of American Idol represent polar opposites on the continuum of risk. Insurance is sure, stable and, well, boring. Idol, while the rewards are staggering, is a crapshoot, but it is very exciting. When it comes to technology, those on the bleeding edge are like the Idol auditioners, taking big risks for a big payoff. Insurers, even those who adopt newer technologies, will never be among this group, because risk is the very thing they seek to avoid. We are an industry of technological followers, and that is really a good thing in terms of the stability we need to project to our insureds.
The bleeding edge is a cool and exciting place to be, but—by definition—it is also bloody.
Ara C. Trembly (www.aratremblytechnology.com) is the founder of Ara Trembly, The Tech Consultant, and a longtime observer of technology in insurance and financial services.
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