Tag Archives: alan walker

How to Speed Up Product Development

The traditional product development cycle in property and casualty insurance moves at a snail’s pace. Drafts, approvals, revisions, verifications of key details and other steps place months between the moment a product is envisioned and the day it becomes available to customers.

As technology speeds the pace of daily life and business, the traditional product development cycle continues to represent a drag on P&C insurers’ efficiency and bottom line. Here, we discuss some of the biggest pain points in the product development cycle and ways to boost speed without sacrificing quality.

Cycle Slowdown No. 1: Outdated Processes

During the last few decades of the 20th century and into the 21st, speeding up the product development cycle wasn’t on most P&C insurers’ to-do lists, Debbie Marquette wrote in a 2008 issue of the Journal of Insurance Operations. Using the fax and physical mail options of the time kept pace with the as-needed approach to product development.

Marquette noted that in previous decades, product development not only involved a team, but it often involved in-person meetings. “It was difficult to get all the appropriate parties together for a complete review of the product before the filing,” Marquette wrote, “and, therefore, input from a vital party was sometimes missed, resulting in costly mistakes, re-filing fees and delays in getting important products to market before the competition.”

In the 1990s, the National Association of Insurance Commissioners (NAIC) realized that the rise of computing required a change in the way new insurance products were filed and tracked. The result was the System for Electronic Rate and Form Filing (SERFF).

SERFF’s use rose steadily after its introduction in 1998, and use of the system doubled from 2003 to 2004 alone, according to a 2004 report by the Insurance Journal. By 2009, however, SERFF’s lack of full automation caused some commentators, including Eli Lehrer, to question whether the system needed an update, an overhaul or a total replacement.

Property and casualty insurers adapted to SERFF and the rise of other tech tools such as personal computing, word processors and spreadsheets. Yet adaptation has been slow. Today, many P&C insurers are still stuck in the document-and-spreadsheet phase of product development, requiring members of a product development team to review drafts manually and relying on human attention to detail to spot minor but essential changes.

The result? A product development process that looks remarkably similar to the process of the 1980s. The drafts and research have migrated from paper to screens, but teams must still meet physically or digitally, compare drafts by hand and make decisions — and the need to ensure no crucial detail is missed slows the product development process to a crawl.

See also: P&C Core Systems: Beyond the First Wave  

Cycle Solution No. 1: Better Systems

The technology exists to reduce the time spent in the development process. To date, however, many P&C insurers have been slow to adopt it.

Electronic product management systems streamline the process of product development. The “new-old” way of using email, spreadsheets and PDFs maintains the same walls and oversight difficulties as the “old-old” way of face to face meetings and snail mail.

In a system designed for product development, however, information is kept in a single location, automated algorithms can be used to scan for minute differences and to track changes and tracking and alerts keep everyone on schedule.

By eliminating barriers, these systems reduce the time required to create a P&C insurance product. They also help reduce errors and save mental bandwidth for team members, allowing them to focus on the salient details of the product rather than on keeping track of their own schedules and paperwork.

Cycle Slowdown No. 2: Differentiation and Specificity

Once upon a time, P&C insurers’ products competed primarily on price. As a result, there was little need to differentiate products from other products sold by the same insurer or from similar insurance products sold by competitors. During product development, insurers allowed differentiation to take a backseat to other issues.

“Prior to the mid-1990s,” Cognizant in a recent white paper notes, “insurance distributors held most of the knowledge regarding insurance products, pricing and processes — requiring customers to have the assistance of an intermediary.”

Today, however, customers know more than ever. They’re also more capable than ever of comparing P&C insurance products based on multiple factors, not only on price. That means insurance companies are now focusing on differentiation during product development — which adds time to the process required to bring an insurance product to market.

Cycle Solution No. 2: Automation

Automation tools can be employed during the product development cycle to provide better insight, track behavior to identify unfilled niches for products and lay the foundation for a strong product launch.

As Frank Memmo Jr. and Ryan Knopp note in ThinkAdvisor, omnichannel software solutions provide a number of customer-facing benefits. A system that gathers, stores and tracks customer data — and that communicates with a product management system — provides profound insights to its insurance company, as well. When automation is used to gather and analyze data, it can significantly shorten the time required to develop insurance products that respond to customers’ ever-changing needs.

“An enterprise-wide solution enables workflow-driven processes that ensure all participants in the process review and sign off where required,” Brian Abajah writes at Turnkey Africa. “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.”

The Future of Development: Takeaways for P&C Insurers

Insurtech has taken the lead in coordinating property and casualty insurers with the pace of modern digital life. It’s not surprising, for example, that Capgemini’s Top Ten Trends in Property & Casualty Insurance 2018 are all tech-related, from the use of analytics and advanced algorithms to track customer behavior to the ways that drones and automated vehicles change the way insurers think about and assess risk.

It’s also not surprising, then, that companies using technology from 1998 find themselves stuck in a 20th-century pace of product development — and, increasingly, with 20th-century products.

See also: How Not to Transform P&C Core Systems  

As a McKinsey white paper notes, the digital revolution in insurance not only has the potential to change the way in which insurance products are developed, but also to change the products themselves. Digital insurance coverages are on the rise, and demand is expected to increase as the first generation of digital natives begins to reach adulthood.

Alan Walker at Capgemini recently predicted that in the near future property and casualty insurance product development will become modular. “Modular design enables myriad new products to be developed quickly and easily,” Walker says.

It also allows insurers to respond more nimbly to customers’ demands for personalized coverage. And while the boardroom and paperwork approach to development is ill-equipped to handle modular products, many product development and management systems can adapt easily to such an approach.

“Insurance products embody each insurance company’s understanding of the future,” Donald Light, a director at Celent, wrote in 2006. “As an insurance company’s view of possible gains, losses, risks and opportunities change, its products must change.”

Twelve years later, Light’s words remain true. Not only must insurance company products change, but so must the processes by which companies envision, develop and edit those products.

Just as the fax machine and email changed insurance in previous decades, the rise of analytics and big data stand to revolutionize — and to speed up — the product development process.

The Insurer of the Future – Part 12

Given that the customer of the future wants solutions rather than products, the employee benefits provider of the future will offer a wider range of products, all designed to work together.

Knowing that careers are becoming to be more fragmented (shorter tenure, parallel income streams, the gig economy), the employee benefits provider will also reduce its dependence on employers.

See also: The Insurer of the Future – Part 10  

The employee benefits provider of the future will offer a broad platform with multiple products (not least life, retirement, health, auto and home) open to employees of multiple companies. That doesn’t mean every employer’s scheme will be the same, as there will still be specifics tuned to the desires of individual companies. But all of the core covers will be the same, allowing the benefits provider to leverage massive buying power, securing excellent deals for employers and employees alike.

Because the core benefits are the same across companies, they’re also portable – very helpful in a world where employees hop regularly from job to job. When an employee leaves company A, he or she can port the entire benefits package to company B. If there’s any premium shortfall, the employee can pay that personally. And the employee benefits provider retains the employee as a customer for longer.

But the new proposition goes even further – because the model recognizes the gig economy and is therefore open to one-person businesses such as Uber drivers as well as employees of larger companies. This, of course, further broadens the customer base served by the provider.

See also: 4 Hot Spots for Innovation in Insurance  

In time, workers’ loyalty will perhaps become more focused on their employee benefits provider than on their individual employers – re-positioning this segment of the industry and opening up further opportunities for innovation.

Earlier articles in this series can be found here.

The Insurer of the Future – Part 11

As I indicated in Part 10, I’m expecting the future role of the broker or agent to be severely curtailed. But that’s not to say there’s no role for intermediaries of a different type.

In commercial lines, I expect to see an expansion of the push that some of the brokers have already made into broader risk management. The Risk Manager of the Future will provide a holistic risk management service to its biggest corporate clients – drawing heavily on IoT and big data analytics to predict risks real-time and prevent them from crystallizing.

Only a small part of the risk manager’s service will involve insurance, but the risk placement process will be highly efficient. The risk manager will be seamlessly integrated with a wide network of insurers that, together, can meet all of the insurance needs of clients.

See also: The Insurer of the Future – Part 10  

The risk manager will place business in two ways: standard and bespoke. However, those terms describe the relationship not with clients, but with partner insurers.

If a risk is standard, such as marine or aircraft cover, the Risk Manager of the Future will already have made arrangements to place pre-agreed percentages or exposure bands with a range of different insurers. And those business rules will be built into a “risk placement hub” linked directly into those insurers’ core systems. This means that the risk can be underwritten in accordance with those pre-agreed arrangements, and policy documents generated, in a matter of seconds.

If, on the other hand, the risk doesn’t match previously agreed arrangements, the Risk Manager of the Future‘s “cognitive placement engine” will swing into action. This will pull together all the information it can on the risk, trawling multiple internal and external sources. It will then automatically pass that data to the underwriting systems of multiple different insurers, negotiating pricing with the AI engines of those individual Insurers and constructing the optimum cover for a client — making trade-offs between the different insurers as appropriate.

Again, once the cover package has been designed and placed, policy documents will be generated automatically and issued to the client.

See also: Innovation: ‘Where Do We Start?’  

Using the power of data analytics and AI, this entire process, end-to-end, will take no more than a couple of minutes.

The Insurer of the Future – Part 10

The earlier articles in this series can be found here

Last year, I moved from the U.K. to the U.S. I tried to arrange insurance directly with the brand names I knew best – but it quickly got difficult. I didn’t have a U.S. credit history, I didn’t have a U.S. insurance history, and I’d only just got a U.S. job.

I realized I needed a broker.

See also: How to Support the Agent of the Future  

That broker was Michelle, and she worked wonders for me. She got me the covers I needed, at a good price, at the right insurer for my circumstances. She was thoughtful, courteous and speedy, and I’ve been delighted by her service. As far as I’m concerned, Michelle earned every cent of her commission.

But I never met Michelle. I never even spoke to her. Everything we did, we did by email.

Which got me thinking – how do I know Michelle isn’t an artificial intelligence (AI) system?

For the Insurer of the Future, I think she will be. In the future, there’s nothing Michelle did for me that couldn’t be done by a properly trained, and properly connected, machine. In the Insurer of the Future’s world, human brokers won’t be needed any more.

I can guess what many of you are thinking: “Hah! Let’s see how much he likes a remote machine when his basement floods.” And you’re probably right. In those circumstances, I might indeed want someone to come and (metaphorically) hold my hand.

But if my basement floods, and a real person does turn up, and she tells me her name’s Michelle – won’t that give me what I need?

I think so. If I need a real person, I’ll be happy that a real person turns up. They don’t even need to be an agent or broker – the Insurer of the Future’s on-site claims handler will be fine, thank you very much.

See also: Insurtechs: 10 Super Agents, Power Brokers  

Some tell me I might be right for personal lines, but commercial lines is more complicated. Well, yes – a lot more data will typically need to be located, analyzed and acted upon. But locating, analyzing and acting on data is exactly what machines can usually do better than humans. Which means it’s even more likely that commercial lines brokers will be disappear.

The Insurer of the Future – Part 9

The other entries in this series can be found here.

As we’ve seen in previous parts, the Insurer of the Future will have far fewer employees in pricing and underwriting, in claims, in product development and in the back office.

Overall, therefore, the Insurer of the Future will have far fewer employees per million of premium than its predecessors. Many tasks previously performed by humans will now be delivered by software.

See also: The Key to Digital Innovation Success  

But that means that the remaining humans, fulfilling key strategic and risk management roles, are far more important than they were.

They will have to be the very best professionals available. Their recruitment, training, development and motivation will have to be top-notch.

They’ll need the very best of support to help them be successful.

They’ll have self-help tools at their fingertips, expert systems support, world-class knowledge management capabilities and collaboration tools to ensure they can deliver to their full potential.

They’ll be part of a culture that is dynamic and exciting, in an environment of constant change – and they will relish every minute of it.

Chances are that, on average, they’ll also be significantly better paid.

See also: Where Are All Our Thought Leaders?