Emerging risks are accelerating—climate disruption, cyber volatility, geopolitical shocks, and fractured supply chains are reshaping the playing field for commercial insurers. But the industry’s response? Tepid at best. Only 21% of carriers are confident about their product innovation capabilities, while nearly half are unsure if their efforts will even move the needle. This isn’t just an execution gap—it’s a confidence crisis.
In partnership with Cognizant, HFS surveyed 350 commercial insurance leaders in North America and Europe (including the UK), revealing a stark divide between ambition and execution. To pressure-test the findings and bring real-world nuance to the research, HFS convened a digital roundtable with 11 senior insurance leaders from these regions. The conversation spotlighted how forward-thinking commercial insurers are building innovation sandboxes to test new products, modernizing platforms to enable agility, pushing ecosystem collaboration, and creating environments where data drives faster, smarter decisions. This report presents the key insights and deeper takeaways from that roundtable discussion.
Source: HFS Research, 2025
Risk aversion runs deep among commercial insurance leaders to an extent where uncertainty is hindering meaningful change. While speed-to-market is widely acknowledged as a critical differentiator, they’re still hesitant to embrace agile innovation. This stems not only from a lack of confidence, but from institutional muscle memory shaped by occasional product launches and burdened by the expectation of perfection from day one. Additionally, intermediaries such as brokers and MGAs further complicate the path from ideation to execution, adding friction to what should be an iterative process. What’s missing is a safe middle ground—a sandbox where products can be tested, refined, and matured before being scaled into mainstream. Commercial insurance must shed the ‘all or nothing’ mindset in favor of agile, collaborative experimentation.
In commercial insurance, innovation often thrives in the front office but collapses under the weight of outdated servicing models. While underwriters and brokers are eager to bring differentiated products to market, the post-bind machinery—renewals, endorsements, cancellations—remains mired in legacy systems and fragmented workflows. The result? A massive disconnect between the ambition to innovate and the operational reality to support it. Servicing is still too rigid, manual, and slow to keep up. A CTO from a leading commercial carrier suggested a smarter approach: segment the tech stack to align products with the right infrastructure and adopt modern, rules-driven platforms that externalize and automate complex servicing tasks. A full-stack, platform-led model is the only way to escape the legacy drag and make enterprise-wide agility a reality.
Hoarding data in silos should give way to decentralized ownership through models such as a data mesh that places accountability for data quality and accessibility to the source. It also means elevating data to the boardroom by appointing a data-savvy CTO—someone who sees data as a strategic asset, not just an operational necessity. This marks a shift from passive data collection to actively designing products and decisions around data. And critically, data must speak a common language—‘premium’ shouldn’t mean 20 different things across the same organization.
The obsession with boiling the ocean for every possible data point is a trap. As a leader pointed out during the discussion, “We didn’t start collecting data for the purposes of productization. We were collecting data because we were obligated to do it.” That reminder cuts through the noise—don’t chase data for data’s sake. Start with business value, define the processes that deliver it, and only then pursue the data that actually moves the needle. A real data strategy ties every decision to measurable business value—it’s not about mapping every field but about precision targeting. And let’s be clear: source integration is no plug-and-play fantasy. Without a mature ecosystem—governance, rights, and accountability—you’re enriching nothing. As AI enters the equation, the bar only gets higher. Reputational risk can’t be indemnified away.
The industry is drowning in tools it doesn’t use. Large carriers have brought in CRMs, underwriting workbenches, pricing platforms, and policy admin systems. But they didn’t build them and, more importantly, not for anyone. They configured off-the-shelf tech and assumed that slapping it onto the stack would magically drive adoption. Spoiler: it didn’t. The real issue isn’t the tech—it’s the failure to follow through with change management. As one of our delegates put it: “A solution without adoption is not a solution. It’s just a very expensive proposal.”
Business teams resist automation, dismiss ROI-backed pilots, and block progress with the classic refrain: “this isn’t how we’ve always done it.” Meanwhile, flashy AI vendors line up to pitch their indistinguishable magic beans, and real innovation gets buried under internal politics and inertia. Systems are treated as isolated upgrades, not as parts of an integrated value chain. Data still flows in silos, and ‘interoperability’ is often a red herring. Adoption fails because users encounter a flaw and retreat to their trusty Excel sheets. Can you blame them? No one engaged the real workflows, mapped the pain points, or prioritized user needs. As a leader bluntly put it, “You’ve got to partner and understand what matters to them the most. It’s not about what technology can do for them—it’s about what they need and how can technology enable that requirement.”
Innovation dies when configuration replaces design thinking. Unless insurers introduce technology with feedback loops, change management, clear roadmaps, and accountability, nothing will change.
Innovation in commercial insurance is happening despite legacy constraints and not because they’ve been solved. The leaders in the room aren’t waiting for perfect conditions. As one put it when reflecting on AI adoption in this space, “We’re trying to figure out how to play nice with AI in such a highly regulated field.”
They’re building momentum at the edges—prototyping quick wins in areas such as billing, agent experience, and customer engagement, while core systems remain largely untouched. Innovation studios are becoming proving grounds, where lean offshore teams test ideas with real business users and push viable ones into demand pipelines. Others are embracing ecosystems—partnering with insurtechs and tech giants that offer ready-made capabilities integrated with cloud-native tools. They treat platforms such as Snowflake or Salesforce not just as infrastructure but work with them to guide a technology strategy, shaping what’s possible and influencing how decisions get made. Broker co-creation is evolving too.
Emerging risk isn’t waiting for anyone and neither are the leaders at the digital roundtable. What’s driving real progress isn’t big-bang transformation—but disciplined, incremental innovation at the edges, deep ecosystem collaboration, and an unflinching focus on business value. These insurers are getting real—testing products in sandboxes, modernizing back-end platforms to match front-end ambition, treating data as a strategic asset, and designing for adoption, not just technology implementation. Those excelling in these areas are pulling ahead, meeting evolving risk needs even if not every risk can be solved at once.
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