(Photo credit: AngMoKio.)
In today’s digital environment, life insurers and annuity providers must bring new and innovative products to market just as rapidly as consumer needs evolve.
However, complex, rigid, and aging technology and mainframe-based systems, along with antiquated processes, cripple organizations by extending both time-to-market and costs of new product offerings and their maintenance. Additionally, life insurance and annuities companies often put off new product development and instead focus on more pressing business demands, like addressing regulatory changes.
Yet, organizations that do not get the right products to the right markets fast will not be able to gain new customers or keep existing ones. They will miss out on opportunities to increase share of wallet, will be unable to meet the needs of their insureds, and will be viewed as less attractive to distribution partners, leading to an uphill battle to meet business goals.
Here are five strategies that can help organizations efficiently get innovative, targeted products into the marketplace faster than ever before.
- Explore a Greenfield strategy
In the past, transformation options for insurance carriers were both limited and limiting—carriers had to transform on-premise in an innovation-stifling vacuum. Taking up to five years to implement such transformations, this process was disruptive, costly and risky. In fact, nearly half of these types of projects failed.
Today, carriers have another option—the Greenfield approach—which involves plugging into a partner’s existing administration ecosystem in order to gain the outside perspective and expertise of an industry counterpart, along with a fast and low-risk transformation. By choosing a partner known for its state-of-the-art ecosystem and policy administration competency, a greenfield approach enables carriers to launch a new Tier One ecosystem within nine months and new products in just 90 days. Increasingly carriers are setting up internal divisions or creating spinoffs such as MetLife’s Brighthouse, to address these concerns.
- Lead the way; be a trailblazer
For years, many insurance companies chose to be “fast followers”—organizations that weren’t first out of the gate with leading-edge innovations, but second in line where they reaped great benefits without incurring the initial risk.
But as competition heats up and a multitude of pressures land at their front door including navigating regulatory waters, increasing efforts around customer acquisition and finding profitable growth, insurers increasingly are embracing the challenge of being a true leader in innovation, blazing trails for their own success and those they serve.
In this environment, it’s imperative that being first to market, things happen seamlessly. A culture of experimentation and fail fast mentality are key for driving innovation. This strategic approach will generate a host of opportunities for forward-thinking companies to lead themselves and their customers into the future thereby building greater brand favorability along the way.
- Never stop experimenting
These days, we are living with a new normal: change is now the only constant. It’s certainly no longer our grandfather’s market, where insurers could introduce a product and sell it unchanged for ten years—today’s market can leave a product obsolete after ten short months due to continually shifting market conditions and customer needs.
However, the changes driving the need for products to be different do not mean insurance products have to be complex. Today, it has become imperative to simplify products, and to experiment quickly. Carriers must standardize product features and processes wherever possible, differentiating only where they can create a market advantage.
Experimentation has become a part of innovation. The market of today includes customers and customer needs that are dynamic and constantly evolving. As such, carriers cannot automatically know what products will and will not work for them. It is now necessary to test the product, market and sell it at the same time. Agility and cost of launch need to be low with the ability to scale products which succeed and close block the ones which do not.
- Invest in an open distribution platform
The right distribution has become part of critical differentiation—and an insurer’s eventual success. As carriers innovate, different products will appeal to different markets.
The increasing array of sales channels is a double-edged sword. While more and varied sales, self-service, and customer service channels increase the possibility of sales success, the onus is on the carriers to innovate to support diversity of channels and will need different operating models.
In order to drive revenues and profitability, carriers must have an open distribution platform that crosses every potential distribution channel, giving carriers access to different markets and methods to reach their customers.
- Ensure trusted partners have agile platforms
It has become critical for insurers to have an agile platform to future-proof from changes with the market, products and consumer preferences, as well as regulatory requirements. Yet, while an agile platform that is flexible and scalable is a requirement, the right partnership can be just as important.
A carrier’s partner needs to have a culture that is forward-thinking and reflective of the aspirational goals of the carrier. This will ensure that the partner works as an extension of the carrier’s culture, while adding value and challenging the carrier sufficiently to help take the business to the next level.