The insurance industry's reputation for being static and slow to change is rapidly becoming a thing of the past.

Recent years have brought significant advances and innovation to the sector. For example, most insurers have made major investments in digital initiatives as they seek to innovate customer and distribution relationships. At the same time, a pioneering insurance technology (InsurTech) sector has emerged, exploiting digital opportunities to complement — and sometimes compete with — the traditional insurance sector.

Beneath this progress, however, lies a danger. According to industry observers and analysts, as about 80% of traditional insurers' innovation initiatives are failing. While a certain degree of failure in a phase of innovation and learning is to be expected, and indeed embraced, an industry already under considerable profitability pressures can hardly sustain such losses.

What's going wrong?

Understanding how firms are approaching innovation and where they're starting offers some valuable clues. Most of the sector's modernization effort is quite rightly focused on the customer experience. Customers' service and responsiveness expectations have radically changed in the digital age, primarily driven by consumers' own adoption of technology and the service levels they experience in other industries. Today's customers expect service to be mobile, 24/7, socially networked, and big data driven. Insurers must respond to these expectations if they want to remain relevant and not find themselves "Uberized" by a competitor.