The INSURTECH Book

Digital Transformation and Corporate Innovation Management – an Incumbent’s Action Plan

By Dr Ulrich Kleipass

Head of Innovation Berlin, ERGO Group

Digitalization has become of increased strategic relevance: insurance companies have to digitalize their existing businesses and at the same time innovate through new processes, products, markets, and business models.¹ This raises the question of how such an innovation process can be organized. Although not as prominent as in other R&D-intensive industries, innovation isn’t exactly new to the insurance industry. However, what has changed is that a more inward focus in sourcing new ideas has shifted to leveraging external partners, peers, and customers to make advances in innovation. So which guiding principles should be followed?

1. Look beyond incremental innovation

   Incremental innovation is foreseeable and easy to consider in strategic planning. Exponential developments and disruptive innovations on the other hand are much harder to cope with through existing systems. Nevertheless, drivers from the Internet of Things to improved data availability influence how disruptive innovation comes to the insurance industry:² it might be at the customer front end, in the underwriting process, or another function. Consequently, insurance companies need to adapt to become more open to more radical approaches. The goal of innovation should not solely be to drive efficiency further, and sell more of the same at lower cost to more of the same ...