The ability to launch products in record time and manage them over their entire lifecycle gives insurers a decisive advantage over competitors that can translate into increased revenue and above-average growth.So, how do insurers realize those benefits? They can begin by using "best practices" in three areas: organization, process and technology.
1. Executive commitment to product leadership. Effective management of a company's critical assets-its products-generates superior returns. Commitment to being a product leader (or a fast follower) helps companies prosper, even as the market becomes more competitive. That's why companies should recognize "product management" as an important capability that is properly funded.
2. Well-defined product management organization. Draw clear lines of responsibility and accountability, not only to manage product development but also for the financial performance of products. Recognize the distribution channel as an extension of the organization, when it comes to product development. The distribution channel brings a wealth of product ideas, but to get active cooperation, provide effective tools to support them, such as online portals and straight-through processing.
3. A clearly defined process for the entire product and policy lifecycle. Plan the process from the initial concept through sales, service, maintenance and retirement. Insurers that excel at product planning and portfolio management can correctly answer the question, "What products should we develop?" It's critical to understand the market. Learn to target customers and understand what the public is demanding and what needs are unmet. Use that information to develop the right products and repeat every success. Undertake product management with a business approach and don't consider it an IT project.
4. An appropriate level of governance. Make sure products fall in line with the company's overall strategy, can be well-served by its channels and are consistently and properly priced. Test products before selling them.
5. Measurement that confirms efficiency. "What is measured, gets done," goes the popular saying. If insurers want quick product development, they must measure speed to market. If they want the process to manage the risk, they must set specific and measurable product objectives, then regularly measure and report on performance.
6. Separation of "products" from "process". Insurers will not succeed in managing products profitably if product information is hard-coded in legacy systems. Understand what products the company offers, which products may be affected by a regulatory or market change, and what products the company can quickly launch, modify and maintain.
7. Complete product definitions. Many insurers capture incomplete product definitions because they consider rating or pricing the core attribute. This misrepresents products and can lead to costly errors. Best practices dictate that insurers capture all product information in a central place, including eligibility, packaging, pricing, underwriting rules, forms and application questionnaires.
8. Product information as re-usable "components". Define product attributes, such as rates, rules and questionnaires as re-usable components. Make them available to all other enterprise systems that and share costs across multiple products.
9. Enterprisewide tools to support collaboration. Provide easy-to-use tools across the entire value chain at all stages of the product lifecycle. Tools for business users are key to managing the process. Provide workflow to ensure consistency and visibility into the process-analytics for product managers, actuaries and underwriters; dashboards for executives; and portals to serve brokers and customers.
10. A scalable, open and flexible technology platform. Invest in technology platforms that integrate product management solutions with other enterprise systems via standard interfaces. Platforms should support key industry standards such as ACORD XML and service-oriented architecture (SOA). Companies can't rely on yesterday's policy admin systems - they must consider current "best of breed" solutions to leverage existing IT resources, such as admin systems, while providing the functions and flexibility to survive in today's-and tomorrow's-insurance market.
Philippe Lafreniere is director, product management, Camilion Solutions, Markham, Ontario.
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