Trying to create an innovative organization means to have employees who are innovative, within the internal structure of the organization. This paper aimed at examining the influence of work environ-ment on managerial innovation within the insurance sector in Kuwait. A quantitative tool, self-administered questionnaire, was adopted and distributed among165 managers who worked for 21 insurance companies in Kuwait. The results indicate that among the chosen variables representing the dimensions of the work environment, the most influential dimension was facilities. This reveals that it was the influence of facilities that provided a healthy work environment for the employees who enhanced their abilities to present their best performance and be innovative. The study suggests that organizations should pay extra attention to certain factors of employee appraisal such as incentives, appreciation and recognition, that may, in turn, help increase the degree of managerial innovation. In addition, it is suggested to examine the influence of work environment on the leaders’ ethical orientations within the insurance sector in Kuwait.