Running to Stand Still: Insurance Innovation's Real Test

A thousand years ago, well forty-nine to be precise, I entered the working world through the doors of Lloyd’s, notebook in hand and not the faintest idea that I’d spend the rest of my life in and around this endlessly fascinating industry. Back then, the word ‘innovation’ wasn’t one you heard much on the floor of the market. We had paper, we had people, and we had a way of doing things that had been handed down more or less intact for generations. At Lloyd’s, innovation was an embedded culture and mindset, not something consciously strategised. It was simply expected.

Fast forward to today and you cannot walk ten yards through our sector without tripping over the word. So I thought it worth pausing to ask an honest question: how far have we actually come? And, just as importantly, what keeps tripping us up along the way?

The good news: we’ve moved, and we’ve moved a lot

Let me start where I always prefer to, with optimism. Anyone who tells you insurance hasn’t changed simply isn’t paying attention. We’ve travelled from door-to-door salesmen to telephone insurance, from telephone to comparison websites, and now into an era where the conversation isn’t whether we use data, but how much, where, and how effectively we harness it. More importantly, that data has led to knowledge, which has led to more objectively based decision making.

The scale of our sector gives that change real weight. The Association of British Insurers reports that the UK insurance and long-term savings industry is the largest in Europe and the third largest in the world, employing more than 300,000 people, two-thirds of them outside London, and managing investments of £1.4 trillion. This is not a cottage industry tinkering at the edges. When we innovate, it matters.

And innovate we have. After a bruising few years, insurtech funding finally turned a corner. According to Gallagher Re’s latest global insurtech report, global insurtech investment rose 19.5 per cent in 2025 to $5.08 billion, the first annual increase since 2021. As someone who has spent much of the last decade banging the drum for entrepreneurship in our sector, that heartens me enormously. Even more telling is who is now writing the cheques: insurers and reinsurers themselves made 162 venture investments in technology during 2025, a record high, signalling that incumbents no longer see innovators as a threat to be watched from a safe distance, but as a route forward in their own strategies.

Artificial intelligence is, unsurprisingly, the story of the moment. Two-thirds of that funding, nearly $3.3 billion, went to AI-centred businesses. The distinction between ‘insurtech’ and ‘AI company’ is fast dissolving, and the practical dividends are already visible: some insurers report cutting claims processing times by as much as 60 per cent. Meanwhile, 89 per cent of insurers are now investing in digital initiatives, on ABI figures. The intent, at least, is unmistakable.

There’s a subtler point buried in all that progress, and it’s one worth holding on to. Yesterday’s triumph quietly becomes today’s baseline. A claims turnaround that would once have astonished a customer is now simply the price of entry; the moment a capability becomes commoditised, it stops earning you any credit at all. Which means innovation is never a project you finish. It is closer to the character in Through the Looking-Glass who has to run as fast as she can simply to stay in the same place. Stand still in our market and you are, in real terms, going backwards.

The uncomfortable truth: the anchor is still dragging

Now for the part we’re less fond of discussing. For all the funding headlines and AI fanfare, our industry retains a stubborn talent for getting in its own way.

The single largest culprit is depressingly familiar: legacy technology. In one industry survey, outdated infrastructure was cited as a major barrier by almost half (45 per cent) of insurance companies, with 39 per cent saying it actively slows innovation and 34 per cent admitting it stops them getting new products to market quickly. Research from Capgemini found that among life insurers, 52 per cent pointed to outdated technology as a major obstacle to improving the customer experience. These are not small numbers, and they represent a systemic drag rather than a series of isolated glitches.

If you want a cautionary tale writ large, look no further than our own back yard. Lloyd’s Blueprint Two, the ambitious programme to digitalise placement, accounting and claims across the London market, promising over £800 million in reduced costs, was quietly shelved in early 2026 after years of delays and integration struggles. Blueprint Two was not undone by a lack of vision. It was undone by the sheer complexity of trying to modernise, in one sweep, a marketplace of hundreds of interdependent firms, each clinging to their own legacy systems, operating models and risk appetites. The problem it set out to solve has not gone away; if anything, it is more pressing than ever. What faltered was the approach.

And there lies the real lesson. Our blockers are rarely technological in the purest sense. The technology exists; the capital, as we’ve seen, is increasingly available. The genuine obstacles are cultural and organisational.

Two in particular are worth naming. The first is what I’d call innovation theatre: the flashy feature, the keynote-friendly pilot, the shiny thing that photographs beautifully but never actually resolves the customer’s underlying struggle. Real innovation absorbs complexity so the customer only feels the improvement; theatre offloads complexity onto them and calls it progress. We have rather a lot of the latter about.

The second is quieter and more corrosive. We are, stereotypically, an industry not known for taking risks or being willing to fail, a curious irony for a business built entirely on the management of risk. The people who run our operations are trained, rightly, to hunt down and eliminate waste. But to a relentlessly efficiency-minded team, an unproven idea is the ultimate waste; it carries no guaranteed return. Let that mindset sit in judgement over an early-stage experiment and the organisation’s own antibodies will kill it before it ever has a chance to prove itself. Add a shortage of the digital and change-management skills modernisation demands, and a regulatory landscape that, while necessary, adds its own layer of caution, and you begin to see why the anchor drags even as the engines roar.

So how do we actually innovate? A five-point plan

Diagnosis is easy; the interesting work is in the doing. Having spent a career watching what separates the businesses that genuinely transform from those that merely talk about it, here is the plan I’d offer any leadership team serious about change.

1. Make innovation everyone’s job, not a department’s. The single biggest mistake I see is the ‘innovation team’ set up in a glass box while the rest of the organisation carries on exactly as before. Real innovation happens when curiosity is expected of everyone, from the boardroom to the back office. Give the whole organisation permission, and the accountability to question the norm. The answers are almost always locked inside your own people; your job as a leader is to release them.

2. Run today and tomorrow at the same time. The healthiest businesses I know refuse to choose between running the current engine and inventing the next one; they deliberately do both at once. Devote most of your energy to sharpening today’s operation, because that is what funds everything else; iterate hard on the existing book to stay ahead of the pack; and ring-fence a small, protected space to chase the genuinely disruptive bet that might reset the game entirely. Treat the profits of the first as the fuel for the third, and accept a little short-term inefficiency as the price of long-term survival.

3. Build a safe harbour for failure. You cannot demand innovation from a culture that punishes every misstep. Inside the core operation, a 90 per cent failure rate is a catastrophe; inside an exploration team, it’s simply the standard cost of discovery, provided you keep the two properly separated, financially and culturally. Create protected space to experiment, run small and fast, and treat intelligent failure as tuition rather than disaster. Commercial lines and the back office are often the easiest places to start, where a willing audience and clear efficiencies let you build confidence before tackling the harder frontiers.

4. Fix the foundations, then partner rather than just build. It is tempting to bolt an AI proof-of-concept onto a creaking core system and declare victory. Resist it. Clean data and modern, modular architecture are the soil in which every later innovation grows, so take modernisation in sensible, phased steps rather than betting the house on one grand cutover. The fate of Blueprint Two should be pinned above every transformation director’s desk. And with insurers and reinsurers now backing insurtechs at record levels, the smartest players have stopped asking whether to build or buy and started asking who to build with. The insurtech community isn’t a threat to the gene pool; it’s the natural evolution that keeps all of us alert to our ever-changing customers’ needs.

5. Never lose sight of the customer, or the purpose. Technology is only ever a means. The prize is a genuine, emotional connection with the people we serve: moving from being mere payers of claims to active preventers of loss, and tailoring cover to real individual needs rather than one-size-fits-all. And keep one eye on the horizon while you’re at it. We are moving quickly towards a world in which a customer’s own AI agent does the searching, comparing and buying on their behalf. The winners will be the businesses that are, at once, perfectly legible to the algorithm and genuinely indispensable to the human being behind it. Anchor every initiative to a clear ‘why’, and innovation stops being a buzzword and becomes a habit.

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A closing thought

Our industry has come a remarkable distance in my working lifetime, and I remain, incurably, an optimist about where it’s headed. The capital is returning, the tools are extraordinary, and a new generation is arriving with fresh eyes and no patience for ‘the way we’ve always done it’.

The blockers are real, but they are, every one of them, of our own making, which means they are ours to remove. So my challenge to you is the same one I offer every year: release your inner curiosity, see the art of the possible, and go and solve something that actually matters.

The doors are open. It costs nothing to walk through them and who knows where the conversations might take you.

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Mark ‘Hux’ Huxley is the founder of Huxley Advisory, with nearly 50 years’ service to the insurance industry. He mentors and advises businesses across brand, proposition, purpose, leadership and operations.