Speed to market is always important when it comes to introducing new insurance products. In general, all companies require efficient insurance product development, but in certain cases it’s non-negotiable, such as when a company wants to enter into an emerging market and quickly gain market share, when program business is being moved between carriers and they can’t risk a lapse in coverage, or if an existing carrier is trying to accommodate a large account that has an immediate additional coverage need.
As decades-long providers of insurance product consulting for hundreds of insurance companies across every jurisdiction, we have determined the actions that can significantly impact the speed at which a new product is rolled out.
Here are some important tips to accelerate new product development:
Know your market.
Understanding your market means a couple of things. First, know who your competitors are. Examine who’s writing, what they’re covering and charging, their profitability and their market share. Next, get to know the environment from a regulatory standpoint. Look closely at how the Departments of Insurance (DOIs) treat the line of business in the states in which you will be writing.
Confirm that your company is licensed to write the new product.
Sounds obvious, but plenty of insurance companies rush past this step and pay for it later. Amending your certificate of authority is a lengthy process and, as such, needs to be addressed early on by someone familiar with the company licensing process. Double check first, so as not to waste time and resources on stalled product development.
Flesh out your coverage and check for consistency.
Once you have conducted research and developed product concepts, draft the policy forms, then calculate the rates and premium that will be charged. Make sure your form contains clear, unambiguous and, if possible, tested language, your rates balance competitiveness and adequacy, and your rates and forms are consistent, i.e. that they make sense together.
Ensure your product is compliant in the states you want to write.
It is unlikely that all states will allow you to write the exact product you want. Rather, you will likely need to modify the product, at least a little bit, in each state in which you write. Before filing or implementing your product, conduct a thorough compliance review on both rates and forms, making adjustments as necessary. Shortcutting this crucial step in the product development process will likely result in delays, rejections or time-consuming questions from DOIs.
Be smart about your state filings.
Before starting the mechanics of the filing submissions, you should strategize about how to optimize the outcome of your state filings. Learn about and consider incorporating any rating flexibility that is available in your states to create a more robust rating manual. Take advantage of confidentiality rules to prevent competitors from seeing every aspect of your rating model or underlying support. Determine the priority order of filing submissions by considering DOI turn-around times, filing laws, filing support requirements, desired launch dates and projected premiums by state.
When it comes to releasing a new product quickly, the single most important rule is this: approach insurance product development in an organized manner. Cutting corners will almost always result in re-work and undue delays on the back-end.
Product development is a process that requires expertise in many different insurance-related specialties and extensive industry knowledge. If your in-house teams are not equipped to handle the time-consuming specifics or manage the critical details, partner with an insurance product consulting firm whose industry, marketplace and compliance experience can get your product to market quickly and cost-effectively.