FOMO-driven innovation: How 'fear of missing out' is pushing insurers to act

Rob Galbraith, founder and CEO of Forestview Insights, has spent years working with insurance companies, challenging their status quo, and guiding them to innovate. During this time, he has realized the profound nature of insurance institutions, which have enjoyed decades of stability, unaffected by the kind of disruptive forces that other industries, such as the media or technology, have faced.

“You don't have that kind of start-up like Netflix that comes in and in ten years becomes the market leader while everyone else is trying to catch up,” Galbraith said.

This stability has made the insurance industry resilient to rapid change. As a result, organizations often struggle to adapt to the new realities of an evolving business environment.

“Because you have such stability, you have fixed processes, fixed order,” he said, emphasizing the difficulty of fostering a culture of change.

The main problem in driving change within insurance companies, Galbraith explained, is that until there is a clear and imminent threat, “it is very difficult for organizations to move quickly.” Innovation requires not just new ideas, but an organizational mindset shift, something that large, well-established insurance firms have trouble embracing.

However, within the last five years, there has been a significant change. “There's more transparency, frankly, in the insurance market than ever before,” he said.

Companies are starting to be more open about how they innovate and their areas of focus.

“We're seeing this in a lot of older conferences,” Galbraith said.

FOMO-driven innovation

One of the factors driving this change, according to Galbraith, is the rise of insuretechs and external pressures. He tells IB that “both sellers and consultancies, rating agencies, rating agencies and regulators have started to include new items as a means of evaluation in their evaluation of insurance companies. This external pressure has created what he describes as a bit of “FOMO” within the industry, encouraging companies to act even if they don't fully understand where they need to go.

Galbraith's role has grown to include teaching these companies about innovation as a discipline.

“What I'm coming to preach is the idea that innovation is a different behavior than applications, no different than writing, no different than actuarial science,” he said.

Unlike underwriting or claims, which have well-established best practices and professional designations, the scope of innovation has not been defined.

“It's kind of wild, wild west,” Galbraith said. He explained that the discipline of innovation is still in its infancy in many insurance companies. “There haven't been many best practices, and those are starting to form now.”

'It's that muddy area that most organizations don't really understand'

As companies face the development of the world, Galbraith emphasizes the need to move away from the fashion path that many have taken.

“In the past, I've seen pet projects where the chief application officer has certain duties, the officer under him has his own, and these innovation efforts may not meet strategic goals,” he said.

“We think of innovation as the thinking phase,” he says, but the real challenge lies in what he calls the “muddy zone” – the often overlooked steps between coming up with an idea and actually making it happen.

“It's in the middle of nowhere that a lot of organizations don't really understand.” The importance of having a clear innovation process cannot be overstated, according to Galbraith.

“How do you go from ideation to implementation? What's your process?” These are the questions he encourages companies to ask themselves. In his experience, it is not a lack of good ideas that hold companies back, but their inability to manage the process effectively.

“How do you decide which ideas to pursue, and how do you measure and evaluate as you go through the process?” you prune.

Another important challenge is knowing when to pull the plug on projects that aren't working.

“You need to be able to end projects in the middle and pursue more productive ones,” Galbraith said. Without this ability, companies are at risk of sinking into methods that do not produce the desired results.