Product Development: Are You Ready to Innovate?
You can tell a lot about life and annuity companies by the types of products they offer. Some insurers have built reputations as product manufacturers focused on offering a distinctive portfolio, while others seek to differentiate themselves through effective product distribution. But behind closed doors, most companies admit that they are really just “fast followers” of successful products introduced by competitors.
An emerging class of insurers is focused on becoming “fast learners,” and will use that knowledge to innovate in ways the followers will find difficult to match. The new cycle of “innovate, manufacture, distribute” will allow those carriers with both market insight and an agile development program to identify and capture emerging customer needs and drive sustained growth.
Emerging Class of Products
Most carriers think in terms of introducing new features to existing products, but that’s just one of many ways to innovate. Life insurers, for example, are beginning to introduce a new class of composite products that package long-term care with traditional insurance. Emerging annuity plans allow accumulation and withdrawal to occur simultaneously.
Within the next five years, the concept of market segmentation, or the development of products targeted to specific and narrow customer segments (perhaps as low as 100 individuals), will be part of mainstream development.
What can innovation do for a carrier? In a mature market, efficient insurers will be able to target highly desirable (and profitable) segments of the market, leaving the less-desirable remainder for other carriers. And, with more targeted prospect profiles, needs analysis and sales calls will have a much higher yield.
Finely Tuned Processes
Carriers that choose to innovate must have finely tuned product development processes as well as the technology to support them. Speed to market is imperative but it is no guarantee of success. Getting the wrong products to market more quickly makes matters worse, not better.
Emphasis must be placed on the end-to-end product life cycle — not just the traditional specifications-to-production process focused on by most IT departments. Support for traditional marketing functions such as customer analytics and product performance must be included, which in turn will create new requirements for supporting technology. The overall process is characterized by a focus on highly collaborative knowledge work performed by a variety of subject matter experts.
From a technology standpoint, the industry’s emphasis on the policy administration system as the core application for product development must change. Most carriers have multiple administration systems, and these applications have been developed to enable efficient insurance transaction processing for new and in-force business.
These systems have become the de facto repository for product rules and calculations, which are buried deep in code and don’t facilitate easy re-use. Those older admin systems aren’t going away anytime soon because they support millions of policies. So technology to support product innovation must embrace the existence of a carrier’s existing systems rather than assuming they just go away.
To develop innovative products, technology must specifically target the end-to-end business process of product creation. CSC, the industry’s leading provider of life and annuity software, is developing a tool that will do just that. CSC’s Product Accelerator® will work independently of administration systems and act as both a product repository and configuration tool specifically adapted for innovation — and fast introduction.
Product Accelerator includes a unique combination of product configuration capabilities:
Insurance Rule and Calculation Support
Insurance products utilize complex and specific rules, so requirements for a calculation and rules engine are highly specialized in insurance. Externalizing these calculations from policy administration systems allows the creation of products at the front of the product life cycle. The process is once and done, eliminating the need to hand off specifications to the IT department for coding and the associated delays in review and validation.
Product Accelerator’s rules and calculation engine includes a design tool as well as a highly efficient run-time engine that can be easily integrated into the administration, illustration and other systems that rely on those rules.
Repository
A core enabler of collaborative knowledge work is the centralization of all critical data — documentation, rules, calculations, test beds, product specifications and so on — in one single, secured repository with appropriate versioning and the ability to check in and check out product information. Besides enabling individual product components to be uniformly re-used across products, centralization of all aspects of the product facilitates “one version of the truth” across all stakeholders, including marketing, actuarial, IT and business users.
The repository puts product definitions and knowledge assets under control at a single point rather than across many systems, file cabinets and desktops.
Product Library
“Empty” configuration tools have limited usefulness — especially if they require the carrier to invest thousands of hours of up-front time adding common insurance products to the library before the system becomes practical to use. Unlike other systems, Product Accelerator will include pre-loaded insurance products in the repository, allowing insurers to focus on points of difference rather than wholesale product specifications.
Life Cycle Support
The configuration tool provides a common environment for all stakeholders in the product development process. This includes specialized user interfaces (workbenches) for specific tasks such as actuarial design in addition to tools and methodology for critical path tasks such as regression testing. Supporting user interfaces and tools will free users of the need to know specific programming languages. This resolves many problems arising from business-to-IT handoffs and the inevitable information disconnects.
Don’t Get Left Behind
Life and annuity carriers must focus on the business competency that makes them distinctive, and more often than not it’s the products they bring to market. Product Accelerator is the first of an emerging class of applications built specifically for product innovation — not just speed to market.
As carriers adopt this new technology and take product innovation to the next level, the era of fast followers could be coming to an end. Don’t get left behind.
Get More Information
To learn more about CSC’s Product Accelerator, contact us by phone or email. Only CSC will use the information you provide.