Insurance carriers need product development flexibility and "speed to market" to maintain competitive advantage. To help accomplish those goals, INN asked Doug Roller, CEO of Bolivar, Mo.-headquartered Duck Creek Technologies Inc., to describe his "product in a day" concept.INN: How would you define "product in a day?"
DR: Product in a Day (or PIAD) is a vision for the way insurance products-policies-should be delivered to target markets. Even with today's technology, the development process for insurance products can take many months or even years. It involves market analysis, product definition, product implementation (software and documentation), filing and compliance management, and deployment of software and other sales, services, and marketing assets to all points of sale and service. PIAD is about dramatically reducing the cycle time required to deliver new products to market and continuously improving existing products.
INN: Why is PIAD important?
DR: Carriers often focus on the efficiency of sales, service and claims fulfillment operations-and less often on the product development process. That's easy to do because the cost of poor product development is less obvious than the cost of inefficient operations. Nevertheless, poor product development can be the most expensive cost a carrier incurs.
For example, let's consider a carrier that has a great concept for a new product-or an improvement to an existing product-that has the potential to generate $40 million in premium in Year 1. Every day that the product is delayed could cost the carrier $100,000 of premium in an uncontested market. That high-margin premium is traded for downstream premium that the insurer likely will share with other carriers, eroding not only market share but also pricing and combined ratios. What if the product had been deployed the day after it was conceived?
INN: That doesn't seem possible.
DR: For those of us who have developed and implemented policy administration systems for insurance carriers, PIAD would appear to be an unattainable objective. First of all, there are delivery constraints-filing and compliance for example-that are outside the carrier's control. Second, P&C products are enormously complex, making it difficult for carriers to clearly define product requirements and for vendors to understand them.
As a vision, however, PIAD provides a context and a goal for carriers and software vendors alike. Pushed to maintain viability, carriers need to invest continually in product development, while using today's technology to remain competitive. With so much potential value in play for every day saved, there are certainly financial rewards for achieving it.
INN: How do carriers begin the PIAD journey?
DR: As the saying goes, every journey begins with a single step. Carriers can start by identifying and addressing the business processes most easily improved. They can achieve continuous improvement by re-engineering business processes and measuring the results on product deployment. That could include streamlining "human intelligence" activities, such as obtaining and organizing input from field operations, as well as automating product modeling and analysis.
Then, take a look at larger systems, such as sales and policy administration. Carriers can benefit by finding ways to improve implementation processes on existing systems. At some point, when time has been compressed as much as reasonably possible, carriers may determine that it's time to think about new software. The point is that every day has value.
INN: How should software support PIAD?
DR: It's important to define processes before buying software to support them. That's true for any software investment but particularly so for PIAD. That said, software can support the PIAD journey in several ways.
A number of solutions now enable tool-based product definition and design, including rating, underwriting rules, data models, workflow and documentation. For carriers that derive market advantage from highly customized products, those tools can prove useful in improving speed to market as well as required customization.
A policy administration system built around a services-oriented architecture (SOA) platform also can reduce time to market. First, SOA simplifies deployment of software services and, second, services can be made widely available to points of sale and service inside and outside the carrier.
An integrated analytics and product modeling solution provides the foundation for continuous, timely product improvements. Analytics provides information needed to identify potential problems and opportunities in the product line, and modeling enables carriers to observe the effect of proposed changes that address those problems and opportunities.
INN: When is the PIAD journey complete?
DR: The poet T.S. Eliot wrote: "Between the idea and the reality...falls the shadow." Carriers achieve PIAD when they remove every barrier between the idea and the reality of a product.
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