To cut through the claims of innovation in the market, you need to know what you’re looking for. There are plenty of capital models, catastrophe models and Enterprise Risk Management (ERM) practices in the (re)insurance industry, but which are the most valuable innovations? The right choices can protect your capital, help you deploy it optimally and ultimately bolster shareholder value … but faux innovation can slow your growth — or leave you exposed to unexpected risk or still leave you exposed when you thought the gap had been filled.
As you evaluate the solutions available in the (re)insurance industry, here are five ways to make sure you’re choices are on the leading edge:
1. Know the problem a solution addresses: The most important innovators in the (re)insurance industry help carriers tackle the most vexing problems they face — like systemic risk, hidden accumulations and casualty catastrophes. And, a focus on today isn’t enough: the innovators also anticipate the future challenges that (re)insurers are likely to encounter, developing solutions before they are needed.
2. Understand how it works: An innovative solution needs to have staying power. Cobbling together outdated tools from disparate platforms only shrinks an already shortening path to obsolescence. Robust processes and integrated technologies, on the other hand, are more likely to endure in a rapidly changing marketplace … especially if they are flexible and extensible.
3. Gauge the impact: A truly unique, powerful application of leading thinking should force an innovator’s competitors to change how they operate in order to keep up with the industry. The implications of effective innovation, therefore, should be evident not just in the portfolio but on your financial statements.
4. Comparison shop: When several solutions seek to address the same issue, you need to determine which one is best suited to your needs. The most reliable innovation usually provides maximum upside relative to total investment, reducing costs and the need for dedicated internal resources. Consider such factors as ease of use and the relevance of additional functionality alongside cost and commodity functionality.
5. Look out for one-hit wonders: Companies with long track records of innovation know what it means to solve problems. Chase the flavor of the month, and you could wind up wedded to a tool or practice that loses its luster quickly. Companies that have made innovation a priority are more likely to deliver and support their solutions effectively, even as they are working on the next wave of innovation. Partner with an innovator, and you’ll be kept ahead of the pack.