Group Insurance Obstacles: Speed to Market Disruption (and How to Avoid It)
We were recently reminiscing about the days when we were young, ambitious teenagers who had secured part-time jobs to learn about responsibility, build character, and of course, earn money. Ed kept the residents of Massachusetts’ South Shore well informed by delivering newspapers for the Patriot-Ledger, while Jacob started out washing dishes and delivering pizzas at a local pizzeria in the suburbs of Atlanta.
Newspapers, pizzerias, and group insurance companies clearly have different products and target markets. However, they all understand that speed to market is key to any successful business. It is critical that the newest and best products go to market as quickly as possible to capture market share in their respective customer segments. Discerning consumers recognize and appreciate the value of a newspaper landing on the doormat just in time to read over breakfast, and the piping hot tomato pie that arrives in 20 minutes just as you’re starting to get hungry.
In the same vein, group insurance members appreciate the value and utility of new and innovative insurance benefits products that readily meet their needs. That said, speed to market remains a top priority for insurers, and they are investing significantly in resources to support new products, services, and processes to achieve it. But insurers remain plagued by legacy technology, complex and fragmented ecosystems, and an economy that is still recovering from the pandemic’s global market disruption. The stakes are also high: slow speed to market results in significant lost revenue and efficiencies, with long-term consequences such as loss of market share and competitive advantage.
Speed to Market: Whys and How-To’s
According to a recent Novarica survey, the average time to market for new group products has trailed the individual life and annuity business by approximately two months. In a tight economy, insurers need to develop and rush new products to market sooner than ever; an extra 30 or 60 days of robust revenues before imitations flood the market can be the difference between profitability and stagnation. New products hitting the market quickly have become even more critical as the insurance market has become overly commoditized, with a myriad of comparable offerings, and insurers ultimately competing solely on price.
In the same Novarica survey, organizations that included their IT teams earlier in the process delivered products faster than those that waited until later stages. In our experience, including IT earlier in the design process helps bring perspective around how to best design a product that fits within the current, or even future, ecosystem and processes. In addition, we have observed carriers trying to bring forward outdated processes and procedures when designing their new future state. When the end goal is to optimize, it is important to design products with an eye toward the future, and to remember that you will be leveraging new tools and capabilities. It can be difficult to shift your team’s thinking to future state mode, but keep reminding them that there may be more optimal strategies to run the business.
A Winning Combination: A Modern Policy Administration System and Repeatable Product Architecture
To stem the tide of inefficiency and sluggish product development outcomes, insurers can implement a strategy which largely consists of consolidation across product offerings and the technology ecosystem. First, start by analyzing your product portfolio with the end goal of being better, faster, and more profitable. Of course, you will need to have buy-in and agreement across the organization depending on your strategic direction. The next step should be mapping applications within your ecosystem and identifying which ones can be retired, replaced, or renovated. This should be done with an eye toward enabling straight-through processing, reducing legacy technology debt, and increasing internal and external usability. Once you have completed that analysis, you can begin to think about designing your “product wizard.” An ideal “product wizard” facilitates easy and repeatable configuration of product and product components. This eliminates the drudgery of having to repeatedly design and build robust product and product components throughout your ecosystem.
In our experience, the “product wizard” best lives within the core policy administration application. Housing the “product wizard” in your core policy administration system creates a hub-and-spoke model that drives efficiencies that alleviate unnecessary spending and labor. Rationalized product architectures are built and housed in a modern core, the hub of the ecosystem, with seamless integration capabilities throughout the spokes. This also allows you to establish products and product rules in one place, enabling faster and more frequent product rollouts. With the hub and spoke, you can push or pull those product rules throughout your administration ecosystem. This model also positions your ecosystem to take advantage of new and innovative technology across the customer lifecycle.
We understand that what we’ve described cannot be accomplished overnight, or by only one person. However, if you truly want to achieve faster speed to market and ensure you are better prepared for the future, these steps are necessary for meeting customers’ ever-changing needs, driving sales growth, and ultimately increasing market share.
To see how Vitech’s V3locity solution can transform insurance administration operations, enable accelerated speed to market and product model objectives, while offering unparalleled security, click here.