I am at the AICP national conference in Orlando, and yesterday attended a session called “Fostering an Innovative Environment.” I was intrigued because innovation is not easy in a highly regulated industry. One speaker, John Palmer of First Consulting and Administration, was clearly passionate about the topic and his part of the presentation was focused on Steve Jobs as role model for innovation. It is hard to argue with the idea that Jobs is an incredible innovator. But what was missing, for me, in the presentation, was the connecting of the dots between innovation in a consumer product market to innovation in insurance. I tried to articulate this in the session, but I wasn’t able to really get to what was bothering me.
Later I realized that the issue I wanted to talk about was whether insurance regulators think of innovation as a good thing. Generally we all think innovation in electronics is a good thing. We expect it and we can’t wait for the next great thing or even the next best incremental improvements. Personally, I’ve been waiting for the iPhone 5 for months.
But in the insurance world, innovation is different. Innovation has to clear regulators first, before it can get to market. From my own experiences, as well as observations, it can be difficult to maintain the “fire in the belly” of a great new idea, through a long regulatory process where obstacle after obstacle must be overcome. Regulators obviously see products that get abused in the market place and that is a real problem that needs to be addressed. But if each innovative product is reviewed by insurance department staff with the perspective that it is the next regulatory headache, innovation at the company level will be tough to sustain.
What I want to talk about is how to get regulators thinking about working collaboratively with companies on innovative products as part of what makes the job rewarding. While there can be problems if the line between regulator and regulated becomes blurred, if a regulator can work with a company on a product that really fills a consumer need AND meets the requirements of the state’s laws and regulations, isn’t that more rewarding than saying no for the regulator and isn’t it better for consumers? I find days that I have meetings with regulators, where we work together talking through product design issues, to be some of my most enjoyable days. Obviously not every idea is a good one. In a highly regulated industry, especially one with prior approval on products, regulators are a key component in finding a way to foster an innovative environment. I want to tap into the real passion that I think many regulators have for consumer protection and work collaboratively to get the innovative products, designed to meet real consumer needs, to the market. Make the products better for consumers through regulation, sure, but let’s still let some of the creativity of the consumer electronics field find it’s way into the more staid world of insurance.