How to run a successful innovation lab
Discover how to set up a successful innovation lab
Read morePhoto by Christopher Alvarenga on Unsplash
When asked to name leading innovation hubs, most people mention Silicon Valley, Tokyo, or London. The flyover states of the Midwest are unlikely to make the list, but it’s making a global name for itself as the centre for insurtech.
How is an area known for cornfields, mining, and factories leading the way in insurtech? And how can corporations benefit from this modern-day midwestern gold rush?
According to Forbes, five of the top ten states best for starting a business are in the Midwest, but what’s the attraction for insurtech startups?
The insurance market is experiencing a lot of disruption. We’re seeing the application of new technologies and the creation of new business models turning centuries-old businesses on their heads. For established insurance and finance brands that take action, the insurtech boom offers a big opportunity.
Mutually beneficial relationships with innovators can help corporations get ahead of competitors and stay relevant. Running an innovation lab is one of the fastest and most effective ways to form such collaborations as they operate an ‘open innovation’ model. To illustrate how this works in practice, let’s discuss Lloyd’s of London, the world’s leading marketplace for risk solutions with a 330-year history.
L Marks established the Lloyd’s Innovation Lab in 2018 and has guided over 80 entrepreneurial teams through our 10-week programme, where Lloyd’s stakeholders and startups work together to develop innovations. The chosen entrepreneurs are given access to the largest insurance market in the world to validate their idea. Meanwhile, Lloyd’s gets access to the latest innovations which tackle their most significant challenges and opportunities—everything from supply chain disruption to data, modelling, and claims handling.
The Lloyd’s lab has bought to market solutions which have aided the delivery of COVID-19 vaccines to low-income countries, helped measure the carbon footprint of customers, and created new products such as critical cloud cover and the world’s first IVF insurance product.
The structured innovation lab has helped Lloyd’s of London;
Here are some of the latest insurtech innovations developed in the Midwest.
1. Predictive modelling to improve underwriting accuracy
Columbus-based car insurer Root Insurance has developed a predictive model using telematics data from over 10 billion miles of driving. The dataset covers granular metrics such as how hard you hit your breaks. Their model is reportedly ten times more predictive of driving behaviour than the industry standard allowing them to more accurately underwrite and personalise insurance policies for each customer.
Root Insurance is only offered via a mobile app. Its streamlined mobile user experience and processes mean it takes just 47 seconds to sign up and around 3 minutes to file a claim.
2. Smart devices driving data and rewards
Another Columbus-based innovator, Beam, developed a smart toothbrush that rewards good dental habits with wellness-related offers and cheaper insurance. Brush for two minutes and earn 10 points you can redeem via their app. Since their initial success, Beam has expanded to offer a portfolio of ancillary employee benefits.
3. Artificial Intelligence creating value from unstructured data
Over in Michigan, Groundspeed uses Artificial Intelligence and Machine Learning algorithms to convert unstructured loss runs, exposure schedules and policy documents into powerful insights. This is helping its users analyse trends and performance across multiple dimensions and identify profitable pools of risk.
Summary
The Midwest offers perfect conditions for a burgeoning innovation hub with a ready talent supply and favourable economic conditions. The cluster of insurance giants is attracting innovative insurtech startups to the region, presenting an immense opportunity for players who seize it.
Insurance giants should use a structured approach to collaborate with insurtech businesses, helping them to move faster than competitors or disruptive startups. Innovation labs offer a tried and tested method for building these partnerships.
If you’d like to discuss how L Marks can run an Innovation Lab for your business, don’t hesitate to get in touch.
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