This article is part of our insurance innovators interview series.
Q1: In your view, what has been the greatest innovation in the P/C insurance industry in recent years? Explain.
Galanski (Navigators): The development of construction wrap-ups, also referred to as “project policies,” has allowed construction specialists like Navigators to insure construction risks that would have been very difficult if not prohibitively expensive to insure in a traditional manner. We entered the wrap-up market a little over a decade ago when it was still a relatively new approach. Today, it is a favored approach for sophisticated construction projects.
Q2: Describe the greatest innovation at your company during your tenure. (It could be a product, process or service.) How did it come about? (Feel free to describe more than one.)
Galanski (Navigators): The greatest innovation at Navigators over the last decade has been marrying our proprietary and home-grown management information capabilities with mobile technology.
Today our underwriters and claims professionals can access amazingly detailed management information on the performance of their books of business from an iPad. Combining industry-leading access to data with mobility has been a winning combination.
Q3: In your view, what innovation or innovator outside the insurance industry has had or is having the greatest impact on the P/C insurance industry?
Galanski (Navigators): Without question, it is the Internet. Today the level of detail and accuracy of information that is readily available to consumers and businesses globally has changed the game. This spreading of knowledge places greater value on specialist underwriters who bring meaningful expertise to solving problems, rather than simply providing a product.
Q4: Describe one or more ways in which your company encourages innovation. (Feel free to describe any elements of the culture or process.)
Stanley Galanski, Navigators
I have found the best source of innovation is spending time with customers—listening to them, to understand their needs and concerns, and then acting upon it. That can occur at any level of a company.
Q5: What is the biggest obstacle to innovation within the insurance industry? Explain. What is your company doing (or what can the industry do) to overcome this obstacle?
Galanski (Navigators): The biggest obstacles to innovation in the U.S. insurance industry are regulatory requirements and the historical willingness of courts to seek deep pockets to pay claims regardless of coverage. It is increasingly difficult to simply express a grant of insurance coverage. As a result, our policies have become more complex and legalistic rather than simplified.
Q6: Do you believe the next innovation to impact the P/C insurance industry will come from inside the industry or from an external innovator? Why?
Galanski (Navigators): The most impactful of the current innovative actions within the industry is coming from “outsiders”—hedge funds and other large financial investors. They have gone from investing in insurers to becoming risk-takers through special purpose vehicles and by capitalizing reinsurers. By transforming insurers’ sources of capital, “outsiders” have fundamentally changed the reinsurance industry. It’s hard to imagine their impact will stop there.
Q8: What is the best book you have read about innovation? The best course or seminar you have attended? What was a key takeaway from the book or education session?
Galanski (Navigators): “Managing in the Next Society” by Peter F. Drucker. In it, Drucker made the observation, “The reason that the financial services industry is in trouble is quite simple. The dominant financial services institutions have not made a single major innovation in 30 years.” Of course, Drucker died in 2005. It would have been fascinating to hear his views after the financial crisis.
Q10: Have you ever collaborated with market competitors to move an innovation forward? If so, why did collaboration make sense in this situation?
Galanski (Navigators): The Lloyd’s market is a perfect example of collaborating to drive innovation. New ideas can be developed in the subscription market because a respected leader can establish the coverage terms and price, with the placement to be completed by others who “follow” the leader without any one risk-taker having to take on an inordinate amount of risk. We have been part of the Lloyd’s market since 1998. Lloyd’s is a wonderful vehicle for insurance innovation globally.
Q11: Outside of providing risk transfer solutions, what are the most likely areas in which insurers can be innovators? Can P/C insurers disrupt other industries or provide noninsurance solutions by applying innovations developed through their core skills in underwriting and risk analysis, settlement negotiations, catastrophe modeling, environmental science or other areas?
Galanski (Navigators): While it is tempting to think about disruptive technologies, insurers are best at innovating when they succeed in two fundamental areas. First, by providing fantastic service through creating a pleasant, efficient and unique experience in which their brokers and policyholders can interact with them. Second, by empowering the most talented people they can find, which requires a superior work environment in which they can prosper and desire to build a long-term career. The two are inextricably linked. Great service comes from terrific people working in a positive and fun environment. That’s an environment in which innovation will be evident.
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