New York – Insurers mired in the inherent complexities of new annuity products don’t have time to review whether it’s a technology or a business problem. They simply want to solve the problem quickly, and with deft precision.
But the fact remains that most annuity writers’ systems and processes are inadequate to keep pace with modern demands, notes Matthew Josefowicz, president of Novarica’s insurance practice in New York.
"Legacy systems with hard-coded product logic and workflows require expensive and time consuming re-coding and testing," Josefowicz tells INN.
Adding to the complexity, these technology challenges are exacerbated by poor overall process management, says Josefowicz, leaving business executives scratching their heads, wondering why they can’t get these products out the door.
“IT may be the most visible element of new product development, but other areas of the company also impact how quickly those products get released,” he says. “Problems in the actuarial, compliance and marketing areas, and even at the executive level, may inhibit new annuity products from being released on time and on budget.”
In its research report, Novarica confirms, based on interviews with several annuity writers, speed to market as one of the top three priorities of their CIO. The report also identifies key issues annuity writers might consider to improve the role technology and business processes play in dealing with speed-to-market matters.
“The need for speed in getting new products and product attributes to market is so generally accepted that few annuity writers have taken steps to actually quantify its value,” notes Josefowicz. “There is a general sense of urgency, but little actual data on how much delays actually cost.”
Josefowicz says annuity writers should make efforts to quantify the financial impact of time to market. While it is already a general priority, each individual technology investment and organizational change required to improve time to market can be significant, and the lack of a quantified business case that includes time to market elements can delay investments.
“A simplified opportunity cost model can be very valuable in quantifying for senior management the actual dollar value of speed to market improvements and in cost-justifying the necessary investments in process and technology,” he says.
The cost justification process usually exposes the area with the longest single duration—IT, which, in turn, tends to get most of the blame for longer time-to-market processes.
“IT is the most significant single component of the process, given the long timeframes involved in coding and testing changes and extensions in many insurers’ legacy systems,” Josefowicz points out, “but in reality, IT is only a fraction of the total time and effort involved in bringing a new product to market.”
Novarica’s report reveals that while annuity writers rightly focus energy on reducing the IT bottlenecks of bringing new products to market, they may overlook the potential for improvements in the other areas.
“In fact, many of the IT bottlenecks are caused by dependencies on non-IT processes (for example, delays in finalizing product attributes),” notes Josefowicz.
Novarica suggests that annuity writers take a critical look at every element (both IT and business) of their new product processes to discover where their bottlenecks are, and how to address them. While the specific issues will vary from company to company, Novarica’s general checklist for improvement includes the following elements:* Quantify the costs of inaction
* Invest in modern, highly configurable core systems
* Implement effective technology ma agement practices that focus on agility and collaboration with business
* Ensure early involvement of IT in product design to enable a rational calculation between product attributes and systems implementation costs and times
* Ensure effective use of collaboration systems for content development and process management
* Provide a clear understanding of roles and responsibilities
* Provide a universal process view available to all participants
* Create clear accountability structures
“Our sources for this research report confirmed several successful initiatives that were the result of focusing on addressing these issues,” Josefowicz says.
For more information on the Novarica report, visit www.novarica.com.
Source: NovaricaExclusive content available only on InsuranceNetworking.com
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