Innovation within insurance market now ‘more crucial source’ of competitive advantage

Innovation within the (re)insurance market is becoming a more “crucial” source of competitive advantage.

That was according to Chaucer, which outlined in its Building for the future white paper today (20 November 2023) that clients were increasingly seeking new solutions for emerging risks.

The (re) insurance group said the risk landscape stemmed from macro trends such as climate change, the rise of intangible assets and digitalisation.

“As clients battle with new and changing risks, one of the major levers in the insurance industry’s strategic toolkit is innovation,” Dr Hayley Maynard, head of innovation at Chaucer, said.

“[This includes] setting up thoughtful, contained experiments to solve for key client challenges.

“No one knows what the future holds, hence the power of innovation and experimentation.”

Pathways

Chaucer said it had developed two innovation pathways – one to enhance existing lines of business through existing coverage and another to test brand new products and markets that have the potential to become major lines of business.

Key themes of interest to Chaucer include weather risk, climate change, intangibles and parametrics.

“Clients increasingly require creative solutions from their (re)insurer,” Maynard said.

“This is a tremendous opportunity for the industry to seize. Whilst there is a real cost of doing nothing, the motivation for investing in innovation should really be more carrot than stick.

“There is so much opportunity, the question is really where to focus next.”