Written by Dr George Shelton

A week or so ago, as I roamed the brightly lit halls of the Brewery at ITC London, flaky pastry in hand, the BBC news app on my phone pinged. 

‘China's DeepSeek AI shakes industry and dents America's swagger’. 

There is little doubt that owners of (the slightly ominously named) DeepSeek, Chinese hedge fund High-Flyer, well and truly achieved their objective of effectively announcing their presence on the global stage and disrupting the status quo. Rival stocks tumbled, and the President of America hailed the launch as a ‘wake-up call’. Eyes collectively swiveled in the direction of the firm at the top of the app store's leaderboard. 

At a conference focused on tech and insurance innovation, the conversation naturally turned to DeepSeek’s free R1 offering - a chatbot that looks, feels, and works a lot like ChatGPT. For the innovation geeks among us, the feat appeared very impressive - developing a viable GenAI bot alternative to OpenAI’s offering for a supposed fraction of the cost (some sources cite the cost for their largest model as being 27 times lower than similar competitor offerings), really caused us to stop and think. 

The Creativity of Constraint

How did they do it? In the face of highly restricted chip restrictions imposed by the US on China, designed to limit competition, DeepSeek was creative in its approach to competing with rivals and may have created something more competitive. This poses a tough but obvious question: 'How is it that, in some instances, imposing restrictions or working with constraints can act as a positive driver of innovation?' Simply put, how can limitations drive innovation?

ITC London is an intimate event, comprised of Insurance Executives who are interested in the very latest Insurtech innovation. Attendees meet to learn, network, share, and grow. Ambitious insurtechs battle for the ears of insurers and prospective partners, innovation executives scour the line-up for the next hot tech, and investors measure the pulse of the insurtech ecosystem. Many of those present are under pressure to innovate in an increasingly borderless, tech-driven, and more uncertain global environment. And whilst innovation (something I define as ‘newness with utility’) is undoubtedly something that lots of us want, we know that actually delivering it is harder than it sounds. 

DeepSeek's R1 isn’t the only example of an outfit with limited resources punching well above its weight. Norway, for example, regularly out-powers much bigger and well-resourced rivals at the Winter Olympics. SpaceX (love or loathe Elon Musk), through resource constraints, has made strides in developing reusable rocket technology (the launch of DeepSeek was even talked about by one commentator as the USA’s ‘Sputnik’ moment). And shortages of capital, raw materials and space prompted Toyota to pioneer their business school textbook favourite ‘just-in-time’ production system, producing only what was needed, when it was needed. 

A number of themes emerged from ITC London, many of which will not be a surprise to those who follow the insurance world closely. Challenges associated with adopting new technology associated with compliance and legacy systems, opportunities and new products made possible through embedded and parametric insurance, and the ongoing battle to attract, retain, and continuously train top talent in the industry.

Additionally though, it was hard to ignore the growing contextual challenges that both organisations, and (arguably more importantly) their customers, are facing. Customers are increasingly feeling the economic squeeze from rising inflation, demanding smarter and more personalised products for less. As global temperatures rise and the climate protection gap increases, troubling questions are emerging around coverage adequacy and even the economic viability of insurance in some locations. With insurtech early-stage funding increasingly hard to come by/expensive, where might this sorely needed innovation come from? 

My suggestion is that we learn from resource-constrained disruptors and see limitations and challenges as invitations to think and behave differently. Insurers are typically very well-financed, which sometimes translates into a lack of urgency for innovation and change. 

Effective allocation of the right resources in the right way, embracing change with creativity and open arms, and fostering collaboration across industries and sectors can only help us in facing these increasingly complex obstacles. 

In the context of limitations, innovation is not always about being the most highly equipped but about making the most of what we have available. 

What are your favourite personal examples of resource-constrained innovation? I’d love to meet you and catch up over a virtual coffee.