Whether you are on the business or IT side, the thought of bringing new insurance products to market is oftentimes fraught with turmoil. Once a company has assessed who needs what product when, why and for how long, the real work begins. Deadlines are established, teams from all areas of the organization are assigned and organized, and the technology backbone that will make meeting those deadlines possible must be shored up.
Along the way, someone in senior management has probably used the terms “speed to market” and “agile enterprise,” making some team leaders shudder—because product development processes for many organizations continue to be highly manual, inefficient and, therefore, expensive.
To hear Steven Coryell tell it, manual processes affect more than efficiencies and cost. “The lack of a central data repository to house product data or rates rules and forms introduces additional risk from a compliance perspective.”
Although the argument can be made that the development and delivery of new or enhanced personal lines products may involve a large degree of regulatory oversight, all lines of business are affected in some way by a growing spate of state and federal regulation.
In this light, Coryell, a business analyst at CNA, Chicago, learned first-hand over the past two years how important it is to orchestrate the right balance of technology and processes, as he helped craft several new D&O and E&O specialty lines products that CNA expects to roll out this month.
“Specialty lines in particular are risks that are constantly evolving—political, economical, legal and, therefore, insurance needs are changing and are changing rapidly,” he says. “In order to meet demand and cover the new risks for those customers, we needed to improve our product lifecycle management (PLM) processes and deliver high-quality, customized products to market faster to satisfy our brokers, agents and policyholders. And we need to do it profitably.”
The competitive landscape for D&O coverage adds more speed-to-market pressure. According to New York-based Advisen, D&O coverage remained the most competitive line of business in the first half of 2007.
Coryell isn’t alone in his quest for customization and quality. Insurance Networking News asked its online readers to identify the most important benefit of using a PLM system. Of the total respondents, 42% stated improved product quality and customization; 39% reported faster time-to-market; 13% said reduced product development costs; and 6% reported reduced distribution costs as the key benefit.
“We are in an era in which customers expect customization,” says Jamie Bisker, global insurance industry leader at Armonk, N.Y.-based IBM. “PLM used to be considered the acronym of the week. But as companies recognize the importance of quality, they are investing in their systems, and they are also investing in their people, saying ‘why not’?”
SEPARATE BUT COLLECTIVE
Mark Gorman understands CNA’s quest to deliver high-quality, customized products, as well as the scale of the insurer’s initiative. Previously in product development at a major carrier, then as a strategic research advisor with Needham, Mass.-based TowerGroup, and now a consultant with Mark Gorman & Assoc., LLC, Minneapolis, he believes success requires a “separate but collective” perspective.
“You can’t ignore the “agility” factor, because it speaks to the need to look at product innovation as separate from product development, which is separate from product deployment,” Gorman says.
Gorman points to the benefits of using PLM tools to overcome unique constraints that are inherent in concept development, analysis and design versus configuration, testing and implementation.
“During development you are taking into account the needs of customers,” Gorman points out. “During deployment, you are focused on being able to process policies and contracts, and do it efficiently to cover overhead. This is where leveraging existing systems is considered, reuse of data is key, and getting stakeholders on the same page is critical to getting the job done.”
Coryell doesn’t disagree, citing the organizational alignment between IT and business stakeholders as one of the critical components that helped keep CNA’s project on track.
Coryell established a “project realization team” (PRT) that included representatives from IT architecture, IT development and IT project management, in conjunction with the business stakeholders, such as the head of product management for specialty lines, and others. A steering committee and a program approval counsel provide board oversight.
“This is where we present our cost/benefit information and progress all the way through the typical IT lifecycle,” says Coryell, “and the people on the board are from the business side.”
A Canadian-based PLM vendor, also considered a partner, is on site as needed, adds Coryell.
“As a group, we’ve partnered on this, and have been joined at the hip throughout the entire process,” he says.
CONSISTENT AND REPEATABLE
The result is a PLM system that enables CNA to create consistent, repeatable processes and leverage existing data in order to introduce even more new products.
The entire effort meant change in both the immediate duties of personnel across several departments, and in the way product management would be managed in the future.
“Bringing a new product to market really represents change management for the entire organization,” says Coryell. “People need to understand that PLM and product development go hand-in-hand in the natural lifecycle of a product. There are changes taking place, new products being added constantly, and the product management aspects of these changes often end up being an afterthought for many companies. So we knew we needed to bring the importance of product lifecycle management to the forefront.
After enlisting the support of executive sponsor Jean Fleischner, VP of CNA’s product management organization, the team engaged stakeholders from underwriting, actuarial, claims, marketing and other departments as necessary.
“We brought them in, explained the project to them, and explained their role in the project,” Coryell explains. “We have been communicating with them ever since on requirements, requirements approvals and all the way through to deployment — and what the expectations are of them. We can’t reach our goals without them.”
Having achieved their more immediate goals (CNA has four existing products in the PLM’s product configurator—those four are scheduled to launch this month) the company will focus on adding additional new products to the system in 2008.
“There are really two components to our project,” says Coryell. “First, we are taking all of our existing products, adding pertinent data to the tool and then putting them into a product configurator. Then we complete workflow automation of the product development processes. We are not aware of anyone else doing this.”
AUTOMATING THE FUTURE
By July, the company hopes to have its entire work intake, development processes, filing prep and processing completely automated, including activities for actuarial, marketing and other non-product development areas.
As the company moves forward, accountability will take center stage as the PRT defines the baseline for measuring its success.
“Establishing a foundation for measuring success has been a challenge,” admits Coryell, “because we’ve even had to define what we mean by ‘speed to market.’ But we have defined the measurement we’ll use and believe we have a comprehensive model that defines duration, effort and costs as a baseline.”
Besides testing its customer base, CNA will use the PLM tools to inform various departments, such as underwriting, the costs incurred as a result of their requests for various forms, endorsements, etc.
“When we present them with the costs for every type of transaction (30 product types), it will be an eye-opener when they see the costs associated with a simple endorsement request,” says Coryell. “Ultimately it’s about accountability. This has been, and will continue to be, a great learning experience for everyone.”
IBM’s Bisker considers CNA to be a model example for other companies trying to effectively measure success. “It goes back to asking whether the company lives in a metrics culture,” he says. “You can’t just slap a metric on something—it might be a great metric, but if it’s executed poorly, forget it. You need the right people in place; you need to test your customer base, make sure the product is meeting a need, and take that intelligence to build more agility and customization into your next product. The chassis of a product such as D&O needs to have a cafeteria plan to adjust that.”
Coryell points out that the scope of the company’s PLM is “not just about underwriting. And it’s not just about them bringing in revenue ... it’s about enabling us to create products that allow them to bring in revenue.”
