The insurance industry is notoriously behind the curve when it comes to innovation. But what explains the gap between insurance and other industries?
Executive Summary
"Not-Invented-Here Fetishism," project thinking, annual budget weapons, "silo supremacy,"… the list goes on.Continuing his series of articles "On Innovation in Insurance," Haden Kirkpatrick reveals the cultural patterns that limit new thinking, sink good ideas and keep insurance organizations from effectively adapting.
"If three or more of these feel familiar, you've got a cultural problem," writes Kirkpatrick, drawing on his experiences as an innovation and strategy leader in both the insurance and telecom industries.
Here, he also outlines challenges present in individual functional departments—ranging from legal to underwriting and actuarial to executive leadership—and proposes cultural remedies. "Change theater" is not part of the fix. Instead, Kirkpatrick advises making leadership and product compensation incentives contingent on innovation metrics and adopting dual hiring and operating tracks among steps to repairing carrier cultures and business models.
Kirkpatrick kicked off the series with an introductory article, "On Innovation in Insurance"
In my experience, innovation in insurance isn’t hard because teams can’t build, the opportunities aren’t clear or customers won’t accept those innovations. It is hard because organizations won’t change or are inflexible to new ideas, processes and methodologies.
The most stubborn obstacles are cultural norms—habits, incentives, risk aversion and unwritten rules—that were optimized for risk transfer and balance-sheet stewardship, not for rapid learning and product creation. In a sector where “first, do no harm” is the guiding principle (and a healthy one), experimentation and innovation often look like threat vectors rather than growth drivers.
This cultural drag, when combined with the homogenous and somewhat incestuous nature of the insurance industry, can and often does halt innovation in its tracks.
This article unpacks the cultural barriers that consistently block innovation in insurance from carriers to brokers and MGAs, while presenting strategies and tactics that have been proven to actually move the business forward and deliver results in other categories and fast-moving InsurTechs. If you’re a leader trying to tilt a centuries-old industry toward a more adaptive future, the first, most important step is moving the culture forward. Consider this article an anthropological study on the cultural limits holding back innovation in insurance and as a field guide on how to get started.
Why Culture Beats Strategy (and Tech) in Insurance
