One of the top priorities for most life/annuity insurers considering a new policy administration system is improved time to market. When considering how to improve this metric, companies need to analyze the multiple facets of their product development process that may contribute to an elongated development cycle. Development or configuration of the admin system is only one of these facets. It will not provide the instant fix companies seek—they must also focus on the other elements of the development process.
When comparing the time to market experience between insurers, it is important to have an apples-to-apples benchmark. Unfortunately, insurers do not always define and track the same stages of development when compiling their numbers.
At a high level, the stages include:
- Ideation
- Research
- Design
- Drafting
- Filing
- Technical Implementation and Testing
However, when tracking the time and effort spent on each stage, most companies only have good data from filing to testing with precision at the sub-task level; they only have anecdotal information from ideation to design.
The type of product will contribute to differences in time to market. Small and medium-sized modifications, such as rate changes and tweaks, can be implemented quickly. Product plans that are “clones” of existing plans will take longer; however, many companies have developed the muscle memory for implementing these types of changes in an efficient manner. Innovative, first-of-a-kind products present the largest challenge for insurers. These will usually take longer to design and can present challenges for development, especially for older, less flexible admin systems.
Another facet that affects time to market is the level of concurrency or overlap between the ideation to filing stages and the p implementation and testing stages. Some companies try to avoid extensive rework by holding up the programming phase until the new product is completely defined. Others will start development once the initial concept is mapped out, accepting that there may be some rework as the product is socialized across the company and refined. In this situation, they are willing to trade off extra effort for less time.
Many companies utilize an approach for improving time to market that separates development efforts between Day 1 and Day 2 functionality. They will only implement what is needed for putting the business on the books and defer future processing until it is absolutely needed (i.e., anniversary processing, time-based coverage changes). This mortgaging of the future can have consequences down the line as the development staff gets bogged down with follow-on work for previously implemented products. As companies begin to incorporate Agile-based methodologies for product development, there are concerns that the minimum viable product becomes another term for Day 2 processing.
Finally, the challenge many companies must face is the increasing number of systems that need to be updated for implementing new products. Product rules are usually contained in multiple systems, including illustrations (new and in force), e-app, new business/underwriting, policy administration, document management, and distribution management systems. In many cases, there are multiple versions of each.
Software vendors are focused on helping insurers shorten the time to market for new products. Some are focused on solutions that provide robust, end-to-end capabilities that allow products to be configured across all business functions utilizing a product configurator that captures and deploys all rules to internal components as well as third-party systems. Others are taking a holistic approach to the product development process that is more integration-focused and facilitates the earlier ideation and design stages as well as capturing, implementing, and testing product rules with more of a total project management approach. Key to the success of these solutions will be the continued evolution of insurance solutions to adopt the architectural best practices of modern systems, such as industry standards, microservices, and low-code/no-code.
For related research on this topic, read the Research Council Study Speed to Market for Life/Annuity Insurers and Executive Brief InsureTech Impact on Life/Annuity Product and Distribution Strategies.
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