As we close out year two of the COVID-19 pandemic, it’s becoming clear that the new normal we’ve adjusted to is here to stay. Addressing the permanence of remote work and emerging risk were top of mind in our most recent meeting of Aite-Novarica Group’s Innovation Advisory Board, an innovation knowledge-sharing group for insurers.
We heard from Charlie Sidoti, Executive Director of InnSure, an insurance innovation hub based out of Cambridge, Massachusetts that is associated with both the Cambridge Innovation Center (CIC) and MIT. The discussion was fascinating and led to great insights in some key areas.
New Workforce Attitudes
The “future of work” has been on the minds of organizations both inside and outside of the insurance world. It’s clear that workers are not generally keen to return to the office any time soon, which means employers will need to rethink how to engage employees and retain talent in 2022. Talent acquisition and retention has largely become ecosystem-centric, and insurers might consider partnering with local innovation centers and universities.
Employee attitudes toward work are also shifting, and it appears as though the gig and “side hustle” economy is here to stay. As Charlie noted, the gig economy is a sort of “portfolio approach” to skill and experience development—and a way to hedge bets workwise against employer-driven uncertainty. The pandemic also accelerated innovation, and with it came demand for new skill sets. Data literacy and expertise have gone from nice-to-have skills to fundamental core requirements, which will be challenging for insurers. The solution may come in the form of embracing uncertainty and engaging with local innovation ecosystems.
Ecosystems and Proximity
Charlie noted that “proximity fuels innovation.” This idea of proximity is partially responsible for making Silicon Valley one of the world’s leading innovation centers. Yet many other metropolitan areas are beginning to emulate this ecosystem approach. Innovation hubs like InnSure have built partnerships with insurers, universities, and other innovation centers.
Other areas, like Research Triangle Park in North Carolina and the Silicon Prairie in Iowa also offer insurers access to local talent and startups. These regional ecosystems, combined with today’s virtual work environment, offer insurers unprecedented access to innovation. The challenge, of course, will be ensuring that engagement with innovation is meaningful, intentional, and actionable.
Emerging Risks
One thing the pandemic has brought to light is the impact of unforeseen catastrophes on risk calculations and underwriting. COVID-19 was certainly one such risk, having forced many questions around business interruption coverage and predictive modeling. As Charlie Sidoti pointed out, climate risk is another. This risk area has been largely unexplored within the industry; some startups and modeling companies are beginning to address it, but there remains a tremendous area of opportunity to contribute and innovate.
The ability to model and prepare for emerging risks like climate change can ultimately help increase pricing transparency and loss prevention, as well as contribute to a better understanding of analyzing and communicating risk. Perhaps the recent Midwestern windstorms have created a vivid, and unfortunate, emphasis on this point.
The Innovation Advisory Board has produced insightful conversation and ideation among insurers. If you’re interested in learning more about this group and Aite-Novarica’s innovation offerings, feel free to contact me at [email protected].