Insurance product life cycle management – An insight

By Wasantha Warnasuriya

The insurers are continuing to learn that managing a product for optimum profitability entails a continuous and quick analysis of large amounts of data, as well as the ability to respond in near real time to the messages that data is sending even though the information technology (IT) has made the world a much more interactive and volatile place. Traditionally, insurance companies, whether they focus on life, health, or property and casualty, have failed to demonstrate a significant degree of creativity or originality in their product offerings, and have been relatively slow to respond to new market opportunities. The industry as a whole has made some good progress in terms of managing existing products via segmentation, but at the moment it appears to be stuck in a conventional mindset that sorely underestimates the full value of both customers and market information.

In fact, many insurance carriers essentially have figured “second place” into their product development strategies, purposely conceding the leading edge to competitors and targeting more traditional product sets. But the market will change. However, the most successful insurers will be the ones that can offer innovative, differentiating products that appeal to increasingly savvy and technologically empowered customers.

Customised, niche products in life, health and property are the next phase in insurance. Capitalising on that trend will require dynamic product lifecycle models designed to quickly take advantage of fluctuating market and customer demands, as well as information systems and data to help identify, predict and manage to those demands. In general, the roadblocks to that phase come in two varieties: disorganized and inconsistent product information including information used to create the product, and a lack of ability to think and act beyond traditional models. Either one or both together can derail effective, revenue-generating product creation and product management.

Successfully managing innovative insurance products depends on the availability of the right data – customer, market and even geopolitical – delivered at the right time to make the right management decisions. But traditionally, there has been a gap between strategic business intelligence and operations. In other words, insurers aren’t realising the full value of linking information to action.

Companies whose business strategies include the micro-segmentation of customers, for instance, need an integrated, rules-based information system capable of analysing data from a multitude of sources. Maybe the idea is to develop a unique auto insurance product keyed to an unusual mix of age and driving experience, vehicle combinations, garage and work locations, and specific credit requirements.

A central data repository for insurance products is a crucial component in a service-based insurance processing environment because it enables standardised product definitions and rules – as well as the availability of those rules for use with other core insurance system components. Internal operations ranging from risk and claims analysis to underwriting, product pricing, marketing, segmentation management and customer retention all can help squeeze significant value and business insight from the same centralised pool of information.²

Product lifecycle management systems also must be multidimensional if carriers expect to be able to develop and deliver innovative products quickly. An integrated IT framework based on a central data repository and analytic engines must be set up to translate into useful information

Insurers need to be able to make assessments accurately and, wherever possible, in real time. This ability will require taking customer and policy information out of those dark closets and using integrated analytic engines to squeeze from it every last drop of value while applying new thinking beyond traditional product and business models.