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Is there room for innovation in the insurance industry?

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This video first ran in October 2011.

Narrator: In PwC’s Diamond Advisory Services’ recent Digital IQ Study,  more than 60 percent of respondents said that the Chief Information Officer has an understanding of how advances in IT could significantly influence or change their company’s core products and services.

Companies are constantly using different methods to evolve and innovate. Google employees get one day off per week to “innovate” and think of the next big product, like Google Maps or Google Earth. That’s 20 percent of employees’ paid time spent innovating.

Would such a plan work for other companies or other industries? We asked Jamie Yoder, managing director of Diamond’s insurance practice about the role of innovation.

Jamie Yoder: I do think clearly understanding its part within the organization and even dedicating some aspect – if you look at the portfolio investment, too often it’s eaten up by “run the business” but too often everyone takes a huge swing towards every project having to have an ROI, which tends to lend itself to efficiency and more marginal improvement plays and not necessarily breakthrough innovation that may be necessary.

How do you really look at what I would call option-creating investments towards innovation that may be necessary as part of your portfolio? It may not be 20 percent for each organization as an understanding of where you’re really trying to take your business, but it could be 10 percent of your investment – 5, 10, 15 percent of your IT investments for innovation – and that’s obviously an innovative way to give everybody a chance to think about it, or there’s a way to take some key people in a lab setting or take both business and technology resources -  but to dedicate some portion of your portfolio in  IT investments aimed at innovation and allow it to flourish in a more creative setting and in a more creative way that don’t necessarily tie to an immediate ROI, which too often becomes the overriding factor.

It’s not getting away from making money. Some of it will make money in the near-term. Some of it’s going to make big money in the longer run, may be a different way to think of it. If you think of it like you would your traditional investment portfolio, it’s really that option-creating investment.

Narrator:  Technology has a huge role in today’s business landscape. From cloud computing to mobile applications, almost every sector is facing new opportunities – and challenges – thanks to technological advances. We asked Jamie how it’s possible to stay on top of the newest tech trends.

Jamie Yoder: It’s actually to continue to … and I don’t want to say “play”, but I think it’s probably a fair word. It’s continue to explore and invest in it and look at those things in new ways. It’s not to just sit on the sidelines and say, “What might that mean?”  but it’s actually to look – and to the point on innovation earlier – “How can I do some things in the labs that actually start to explore and learn the value of it in very small pilots – including in market pilots?” That’s part one.

The second one is really some new model that people explore – Can I actually create partnerships? Insurance companies wouldn’t have thought of this so much in the past, but can I have some partnerships with and alliances with some very leading-edge technology providers? What that might bring is you can use that to sort of feed a pipeline of ideas. A lot of it gets at the point I touched on earlier is about actually dedicating some part of your investment to actually pursue that and look at some of your star technology performers and think about them differently. Think about them almost in a way as start up performers.

More with Jamie Yoder: The Role of the CIO

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  1. [...] This post was mentioned on Twitter by sara conklin, Diamond Advisory Ins. Diamond Advisory Ins said: Is there room for innovation in the #insurance industry @ilstv? http://bit.ly/9qOOtl #CIO #InsIT [...]

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