Insurers: Effective Innovators—Almost

Yep, insurance companies can serve as examples of how to create products that meet needs innovatively. But they fail to spread the message to the max

By G. Michael Maddock and Raphael Louis Vitón

What if we told you insurance is one of the most innovative industries we know? (Hold the smirks. We are serious.)

What if we went further and said that the insurance industry was poised to assume the leadership position when it comes to creating new products, services, and business models in our economy? You'd probably think we were trying to sell you a whole life policy.

Well, the fact that you don't believe us—and again we are totally sincere about this—says a lot about the problem insurance companies have when it comes to innovation, a problem that we bet your industry may have as well. And therein lies a tale.

Innovation in Life Insurance

Let's back up a step. We believe that innovation occurs when:
1. There is a significant need or insight.
2. A product, service, or business model meets that need.
3. There is clear communication that connects No. 1 to No. 2.

By this definition, the insurance industry is clearly innovative—at least when it comes to creating a product that fulfills a need. Consider some of the more obvious benefits available through one type of coverage: life insurance.

The table begs one obvious question: Did you know about these benefits? Probably not. The insurance industry often has two of the three key ingredients for successful innovation: the need and the idea. What is missing is the ability to communicate these ideas in a way that is relevant to increasingly busy people.

A Failure to Communicate

An aside: The fact that up until now the insurance industry has fallen down when it comes to innovation is ironic because innovation couldn't happen without insurance. Every year, hundreds of new products are launched. Products that you put on your skin, your kids, your pet—services that require you walk up steps, get on new rides, and use heavy equipment. Business models that require you to write down your Social Security number and push "Send." The fact is that most of these new ideas would never be launched unless the potential liability associated with each was covered by—you guessed it—insurance.

So, you would think that the insurers would be a master at communicating the benefits they offer. But the fact that they are not is, unfortunately, not unusual. Many times the best insights and products are overwhelmed by poorly executed communication. If you don't agree with this, consider that perhaps the most successful insurance marketing in the past decade involves a talking duck and lizard.

There is nothing wrong with using a cute symbol to get someone's attention.

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