commercial insurance product development justin vanopdorp acas, maaa ge commercial insurance g

Commercial Insurance

Product DevelopmentJustin VanOpdorp ACAS, MAAAGE Commercial Insurance

g

Introduction

• Idea Generation

• Exploration

• Implementation

How would I do it?

Product Development Framework

Idea Generation

Product Development

• Comparison/Benchmarking of Competitors

• Customer Interviews• Idea Generation Teams• Data mining• Claim Audits• U/W Reviews for Emerging Risks• Internet Research• EmployeesWhere do all of the ideas come from?

Idea Generation

Initial Idea• I have an idea:

• This is a good idea because:

• The main benefit of this idea:

• The main concern with this idea:

• One way to handle this concern:

• My next step:

Source: Idea Champions, “Banking on Innovation”

• Feedback

• Qualitative Approach to Product Evaluation

How will management wade through each idea?

Tools for idea evaluation

Evaluation

• Likes

• Concerns

• Suggestions

LCS Approach

Idea Survival versus Idea Killing

Idea Feedback

Source: Idea Champions, “Banking on Innovation”

Keeping Score

Product Evaluation

Weight 0.5 0.2 0.3Product 1 1 5 3 2.4Product 2 3 1 1 2.0Product 3 5 3 5 4.6

• Success for one does not guarantee success for another

• Utilize most promising ideas and modify to meet organization’s needs

Steal the best, improve the rest

Idea Generation

No one best approach

Idea Exploration

Product Development

• Passion

• Leader

• Driver

• Organized

Step #1: Identify an Owner

Projects without owners lack focus

Ownership

• Product Definition

• Data Gathering

• Data Analysis

• Recommendation

Quasi Due Diligence

What do I need to know?

Gathering Information

• Marketing/Sales

• Claims

• U/W

• IT

• Legal

• Finance

Input from all functional areas

Expertise and team environment important

Gathering Information

• Accounting

• Risk Management

• Actuarial

• Policy Processing

• Other Functional Areas

• Who are my experts?• What are the specifics of the

product?• Who are the target customers?

How large is the target market?• Does competition exist?• What will my competitive

advantage be? Price, service, innovation?

• What distribution channel will be used to market and sell the product?

• Who will be responsible for underwriting the risks?

• Which IT system(s) will we use?

Do you know the answer?

Be willing to ask a simple question

Product Definition

• How will premiums be billed and collected?

• How will we rate, quote and issue polices?

• What policy forms and rates will be used?

• Internal or external claims handling?• Are there any regulatory

considerations?• What data will be collected and

stored?• What are the risks of this product?• What information do we need to

monitor?

• Internal or External Relevant Product

Frequently limited internal data to support actual product.

What sources of data are available?

Data Gathering

• Internal or External Proxy

• Probably the most utilized

• Competitor filing, Bureau Data, Adjusted Internal Data

• Most overlooked, Good for reasonableness checks

• Non-related products, Internet, Publications

• Understand the source of the data

• Make appropriate adjustments and relationships

• Quantify risk loads for imperfect information

Analysis generally consists of many subjective assumptions due to limited information and data

Actuarial Creativity

Data Analysis

Provide Recommendation to Management in a consistent

format

Consistency

Recommendation

• Minimize turnaround time

• Meets requirements of management

• Ease of Use

Implementation

Product Development

• Infrastructure

• Communication Plan

• Compliance

• Program Introduction

• Monitor

Implementation

• Distribution Channel

• Policy Forms and Rates

• Underwriting Risk Selection

• Policy & Premium Processing

• Claims

• Data Collection Plan

• IT Systems

• Billing and Collections

• Financial Reporting

Foundation of Success

Develop Infrastructure

• Internal

• External

Execution

Additional Steps to Implementation

Communication

• Regulatory Filings

• Legal Entities

Compliance

• Pilot

• Achieve Goals prior to further release

Introduction

• Production

• Profitability

Monitor

Conclusion

Product Development

• Management Support

• Ownership

• Collective Project

• Infrastructure

• Expertise

• Data Collection

No secret recipes

Principles for Success