I recently hosted our annual European customer conference, focussing on thought leadership, emerging technology trends and Insurtech innovation.

We talked a great deal about the major trends in insurance and there were many highlights about how insurers are digitizing the running of their businesses and interaction with customers.

This kind of event reminds you of the huge tasks involved in transforming a business. For example, Swiss insurer, Basler Versicherungen, talked about the migration of 340,000 motor policies to a new data store. Finding ways to make data easier to extract and consolidate, legacy and new data is a fundamental foundation for a modern insurance business.

Naturally, overcoming practical challenges like Basler’s was a recurring theme. The event also challenged me to reflect on what should drive insurers’ adoption of technology.

Futurologist Magnus Lindkvist was a keynote speaker and his ideas offered much for insurers to ponder. What I took away from his session is - just how much differentiation evaporates when companies compete in the same markets. Think of how all mainstream international hotels end up looking and feeling the same. Or, how extreme competition between civil aerospace companies has led to all airliners having similar designs.

If a business model works well for a competitor, why not replicate it for yourself? This paradigm makes good sense as best practices are shared and emulated among insurers. In fact, that is the model for our very own customer events.

Arguably, this model of duplication, and more of the same, could be ultimately a mistake for many organisations. Quite simply, mimicking the competition alone can inhibit growth, and leave you vulnerable to a new competitor entering your market from left of field. Aside from an obvious – and much cited – example in the taxi industry, there are examples of this happening in other industries. Look at how the UK supermarket sector was disrupted. Lookalike strategies focusing on building bigger megastores in more locations were undermined by the arrival of outsiders like Aldi and Lidl who offered an innovative mix of good quality and low prices. The result has been a shake-up of the cosy predominance of established supermarket chains. As a result, these chains have had to embark on new strategies to differentiate their business – turning to acquisitions to compete more effectively. For example, Sainsbury’s buying Argos or Tesco planning to acquire Booker.

Insurers, similarly, may feel boxed in by industry conformity. Some of this – like regulatory compliance – is integral and essential to how they function, but the ability to use technology to differentiate, rather than make your business conform with the rest of the market, should be considered much more seriously. In other blogs , I have applauded the Insurtech start-ups who are sparking some exciting new ideas, and I believe passionately that more established insurance businesses need to survey start-ups for inspiration and potential partnership.

Lindkvist’s call to the sector is to focus on creativity, rather than competition, if they want to grow. This means taking some bold steps:

Firstly, he recommends looking elsewhere and ignoring trends closest to home. In this respect, might not the insurance industry have learnt more from tracking the rise of Spotify and the growth of the experience economy to understand that the things customers value most are changing?

Secondly, take the equivalent of your first ever bungee jump from the highest point; or well, almost. Experimenting dangerously is something to be applauded, yet making failure acceptable is a real cultural challenge for any traditional business, including an insurance business. I know of several insurers who are recognising already the importance of managed trial and error as the only way to build and progress their business. Their solution is to run innovation labs, where experimentation is the driving force, and mistakes are analysed quickly for the lessons they can provide the next time around.

Thirdly, a point that I thought should really resonate for an industry with modern roots in seventeenth century London: be very, very patient. Lindkvist talked about how the most profound innovations are characterised by being misunderstood for many years before they are accepted, and then become more mainstream. He cited the example of Nespresso and how the pod coffee system (all the rage today) was introduced some 30 years ago. In terms of financial services, it is instructive that 2017 is the 50th anniversary of the ATM, hole-in-the-wall cash machine, that has become truly ubiquitous only in the last 20 years. So, the most profound innovations being developed in those insurance innovation labs may well be those that are exciting, but have no defined market fit today. Perhaps we should consider this as the insurance industry equivalent of pure, rather than applied, scientific research.

While I am inspired by this creativity thesis, I do not think being creative and competitive need to be mutually exclusive. In fact, I feel they go hand in hand – creativity, if channelled correctly, can contribute to the ability to compete more effectively. As the pace of change accelerates, insurers cannot stop at merely aspiring to get closer to their customers, run more responsive personalised information systems, and leap forward into digital; they need to take the actions necessary to get there. Technology can drive creativity in this regard, resulting in an insurer’s ability to be both more competitive and creative, and thus achieve real differentiation. This creative-competitive blend is evidenced already, when you observe how major insurers are nurturing a healthy clutch of exciting, hugely innovative Insurtech start-ups  like  Hiscox (Neos), Admiral (Rightindem) and Allianz (Simplesurance).