Leveraging Technology in Insurance Product Development
| date: April 18th, 2017
Digital-ready platforms provide the best possible solution for insurers seeking to achieve speed-to-market and agility in insurance product development in a rapidly changing market.
Disruptive technologies, emerging risks, competitive threats and new opportunities are forcing insurance carriers to look for ways to rethink their insurance product development process. The customer, no longer content with one-size-fits all product offerings, is demanding products tailored to their individual needs. Vital to any insurer is the ability to rapidly conceptualize, develop and launch relevant new products to the market to drive or sustain growth in market share.
Previously, insurers only engaged in product development on an as-needed basis. Mainly due to the process being painstakingly long and characterized by protracted lead times and product roll-outs. Besides, having to involve various teams i.e. claims, IT, underwriting, sales, marketing and actuarial; holding endless meetings; doing numerous drafts and reviews; there were also the costly mistakes and delays that had to be dealt with afterwards. All this was somewhat mitigated by the fact that the product life cycles then rather than now were relatively long – up to 30 years in some cases. This meant that insurers had ample time to come up with ideas, deliberate over them, process them and even iron out any mistakes that arose.
Hyper-competition + Market Volatility = Shorter Product Life Cycle
The current era of hyper-competition and market volatility has shortened the average product life cycle to an estimated 5 years – and even shorter with technology the impetus of which takes it to about 18 months. The time it now takes to introduce a new insurance product, from idea to market is an estimated 6 – 12 months. Going by these estimates, it looks like an insurer only has about 4 years to profit from a new product, and even less once competitors step in, and replicate.
With shortened product life cycles, comes the need to keep innovating; to develop and introduce new products to market at high speeds in order to gain and maintain a competitive advantage and not miss any lucrative opportunities. Streamlining the insurance product development processes is crucial to ensuring that the right products are developed and efficiency achieved in resource utilization.
Customer-Centricity demands Genuine Market-Led Product Innovation
The marked shift in focus from the product to the customer has now brought customer-centricity to the core of the insurer’s business model. It is therefore imperative that insurers not just re-badge existing products or copy what competitors are putting out. Rather insurer’s need to engage in genuine market-led product innovation, where new product ideas are based on a validated market need and a proven business case. This, combined with accurate market segmentation ensures that the right products are developed to reach the right end-user in good time for maximum return on investment (ROI).
This need for speed-to-market and customer-centricity becomes almost impossible for insurers still running rigid legacy systems with outdated processes and technologies. Product configuration, which centralizes and streamlines the product development process, is one way that insurers running legacy systems can accelerate their product development life cycle.
Enterprise-wide Solution for Product Development Efficiency and Effectiveness
Going a step further and of greater benefit however is an enterprise-wide solution, which will not only automate product development but will also provide insurers with visibility into key tasks and teams involved in the process for easy tracking and effective management. An enterprise-wide solution enables workflow-driven processes that ensure all participants in the process review and sign off where required. Subsequently, there is reduction in product development costs and bottlenecks to result in improved speed-to-market and quality products as well as the ability to develop and modify products concurrently leading to increased revenue.
Over the last 20 years, Turnkey Africa has been providing customized enterprise-wide insurance solutions for some of the largest insurers and intermediaries across Africa. Leveraging our core insurance platform TurnQuest Insurance Suite – our clients have gained the ability to rapidly design and build innovative and tailored products to meet the needs of an ever-evolving customer and market base. Having shed off the weight of legacy systems, these insurers now have the agility and flexibility required to put them at the top of an insurance market that is increasingly being disrupted.
Finally, it is crucial to have a product innovation and technology strategy with a clearly defined objective and area of focus. Such a strategy if driven by the company’s strategic vision and backed up by top management helps reinforce the role of product development in the overall business goal and facilitate on-going product development to compete into the future. Stakeholder buy-in for both the technology and insurance product development strategies not only heightens the company’s ability to absorb the new technology efficiently and put it to work effectively but also to realize the inherent value of the technology.