Speed To Market in the Insurance Industry

Wayne Toms, CEO, GhostDraft

Speed To Market refers to the business priority of accelerating the opening of new growth channels – new products, markets, and ways to access those markets – and reducing the red tape to unleash this growth.

Why is Speed to Market getting so much attention?

Specifically, in insurance, Speed to Market has become very topical, because of several trends in the industry:

• Firstly, in tougher economic times, many customers are looking for affordable insurance options, and insurers have therefore been under pressure to find creative ways of reducing costs and fees.
• This has opened opportunities for disruptive competitors to enter the market – specifically, ones that offer stripped-down products, often directly to customers, unencumbered by legacy structures and systems. Insurtech competitors are also bringing insurance product innovation to market through advanced automation, straight-through processing, and AI.
• This cost-competitive innovation pressure is also a driver for the growth in new channels to customers, including direct – I have seen some research that suggests that currently more than half of new personal lines policies are being sold direct.
• But in parallel to these trends, we have seen the drive towards elevating customer experience. Modern consumers increasingly insist on interacting with services firms on their own terms, and are accustomed to simplicity, convenience, and ease of use – and they are ‘digital first’ – they want to engage and conduct their business online

These trends are driving insurance carriers to tailor – or even in some cases, reinvent – their product offerings, and there is thus a need to manage this process quickly, efficiently, and insightfully. The prize for those who get this right is quicker access to new premium revenues and an opportunity for market share

At GhostDraft we have observed these trends in the South African market, but they are by no means unique to us, and we also see many of our international clients facing the same challenges

The Speed to Market challenges faced by insurers today

The reality is that insurance innovation necessarily requires the input, involvement, and approval of a wide group of roles – marketing, actuarial / underwriting, compliance, IT, legal, sales, distribution, and operations. This is made more complex by skills shortages facing both South African and international insurers, which means the risk of IP loss. This IP than needs to be recaptured during the innovation process, which takes time. Another challenge for insurers is that many of them are also somewhat impeded by dependence on legacy IT systems – critical to their business, but frequently inflexible and difficult to stretch to meet the new requirements.

Moreover, there is a growth in compliance requirements and the fiduciary responsibilities of FSPs means that the barrier to entry is becoming higher in some cases. And even, once a product is launched, it is inevitable that there will need to be a period of in-market testing and rapid refinement – which further complicates the rate of innovation

The levers to improve Speed to Market

• Firstly, finding ways to bring together the full product innovation team and rethink how they collaborate – specifically to remove lag times in product decision-making and approval/rework cycles. For example, the wording of a new policy document for a new insurance line usually needs to be reviewed iteratively by multiple parties. This is a significant opportunity to save time with a more focused method of collaboration.
• A second and especially important lever is a willingness to adopt new useful technologies, even if it requires integration to a third-party solution. Many of our clients are considering making use of third parties for emerging insurance functions – for example, customer screening or the readability scoring of communications – and integrating these new services into their IT ecosystems for new products.
• A further critical lever is the development – incrementally, if necessary – of a digital platform for customer interaction and ensuring that this platform can talk to back-end systems. Then, using this platform as a key component of all new customer solutions to increase customer service levels while harvesting useful customer data.
• The next lever is flexibility to make refinements to products which are already in market – course corrections to product rules/contracts, rates/pricing, sales/marketing tactics, and even processing operations.
• And finally, ruthlessly rethinking models for processing new policies and claims, with the focus on reducing the operating cost per customer, per policy and per claim. The trend of Straight Through Processing, which aims to handle a customer transaction with one touch – is getting a lot of focus

My recommendations

At GhostDraft, in our interaction with large American insurance carriers, we have noted a couple of key secrets of success in our most innovative customers:

• Firstly, they are moving from a ‘design by committee’ model to a more asynchronous collaboration model, underpinned by robust business process logic. Where you define the process workflow and then use systems to manage each party’s interaction with product innovation as and when required. For us as tech providers, we also see how important it is that business users – and not just IT teams – have access to easy-to-use tech solutions as part of the innovation process.
• In addition, they partner with new providers of solution components. Building stuff internally may be safer, but it is almost always significantly slower. Partnering in a controlled manner with solution providers, whether they relate to IT systems or processing services, allows a faster route to insights, and therefore to a viable product. That of course also means finding tech which will allow such flexible integration with existing systems – typically these are cloud providers these days.
• The successful innovators are also more willing to make mistakes as part of their new product journey – if those mistakes are caught quickly. This means being willing to trial new products and refine them quickly even after market launch, and they build in mechanisms to track progress quickly and allow them to do this.
• Particularly for more innovative insurance lines of business or channels – some have allowed for a special ‘amnesty’ on conventional business protocols. These new business areas have been given freedom to explore business processes and structures – as well as systems – which are not fettered by the constraints of the core business – if they adhere to compliance requirements. This gives them a fighting chance at the nimbleness of the disruptive new insurtech competitors

In summary:

Speed to market is not easily possible with current processes, systems, and structures. There needs to be a give and take to open the business to trialling new ways of doing things to develop new institutional muscles. GhostDraft enables insurers to get new products to market faster through our leading suite of document creation, automation, and distribution tools, which are fully integrated into leading policy administration systems.

While our traditional focus has been on large and midsize American insurance carriers, we are increasingly seeing an appetite for our solutions in the South African insurance industry.