This research examines the influence of innovation strategies on the competitive advantage of insurance companies in a developing economy. The study uses a quantitative correlational research design. We collected data from 309 insurance employees in insurance companies in Zambia. A questionnaire was distributed among the participants via Google Forms. Furthermore, Pearson correlation, hierarchical multiple regression, and mediation analyses were conducted using SPSS. The findings indicate that while product and process innovations do not exhibit a statistically significant impact on the competitive advantage of insurance companies, both market innovation and the regulatory framework play a significant role in shaping their competitive positioning. Furthermore, the findings reveal that the regulatory framework mediates the relationship between strategic innovation (involving product, process, and market innovation) and competitive advantage. The study provides insights for insurance companies to enhance their competitive advantage through innovation, emphasising the need to align product, process, and market innovations with regulatory requirements. It also suggests that the regulatory framework can act as a catalyst for innovation, fostering sustainable growth and paving the way for future studies.