Zoran Tsangidis, account manager at RGA Reinsurance Company of Australia, assesses the results of RGA’s first global survey of life insurers. The survey’s findings show there are clear opportunities for insurers around the world to improve their product development process, enhance the innovation of their products, and shorten and strengthen the development cycle

The current market drives insurers to work harder than ever before to remain competitive and profitable. More than ever, product development is becoming a key priority for the global insurance industry. Insurers that invest in new solutions and automate and streamline their product-development processes will find themselves with greater sales volumes and more satisfied customers because of appropriate product fit.

Greater accuracy — characterised by risk dynamics associated with selection — across underwriting and pricing processes is essential. The consequences for insurers that neglect product innovation are dire: They will fail to deliver targeted products to producers and customers quickly and efficiently, and as a result will lose business, as well as market share.

In mid-2014, RGA sought to assess and quantify these issues more closely by conducting our first global survey of life insurers.

We surveyed more than 100 product development leaders in 12 countries across Europe, Asia and the Americas. Some of the companies that participated in this program include MetLife in the US, Korea and Japan, Principal Life in the US, HSBC in the UK, and ING in the US and Korea.

RGA survey results

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Overall, product development in life insurance across the globe continues to be negatively impacted by two major issues: the long lead times required to generate new product ideas and subsequently bringing these ideas to market; and a widespread dissatisfaction with the quality of innovation in the current crop of new product ideas.

The study also yielded a number of interesting insights:

  • The average time needed for a company to take a new product idea from development to launch currently ranges from six to nine and in some cases 12 months
  • Life insurers in most countries do not actively solicit market input from consumer focus groups, market surveys or informed external experts such as reinsurers, actuarial consulting firms or their company’s head offices. Instead, they continue to rely primarily upon competitive intelligence and existing market practices
  • The main bottlenecks in the product development cycle globally are in administration, distribution, marketing and system development (IT). Asia Pacific (APAC) insurers also rely heavily on manual processes compared to their American counterparts
  • Insurers tend to treat distributors as their clients, instead of the end consumer; therefore, they are more likely to optimise new product designs based on what distributors want to sell rather than what consumers want to buy.
  • Partnering with reinsurers can provide insurers with significant insights that can lead to more innovative product solutions.


Key lessons

The findings show that there are clear opportunities for insurers around the world to improve their product development process, enhance the innovation of their products, and shorten and strengthen the development cycle by:

1. Shortening overall product development time

2. Utilising external advice channels more

3. Improving product support functions – IT, administration, marketing

4. Focusing on what the end customer wants


How do these global results compare to the Australian market?

There are a number of notable differences in the market structure here in Australia, with its heavy bank presence and the number of competing products such as those that are superannuation – and investment – based.

Super Funds tend to receive the most priority and attention, which results in shorter product development times when compared to standalone life insurance.

Overall, however, the trend in the Australian life insurance market is similar to what is happening overseas – namely that new products progress at a relatively slow pace from development to release.

It is clear that work is needed in product support and prioritisation, and, most of all, more focus must be placed on the end customers and what they want.


Results of LII reader survey on product innovation

Following the RGA findings, Life Insurance International (LII) conducted its own survey asking readers how protection insurers can enhance the innovation of their products

The results have been split to date with 50% of readers choosing a shortening of the overall product development time and the remainder recommending a need to focus on what the end customer wants.

There were no votes for utilising external advice channels more or improving product support functions, such as IT, administration or marketing.


Case study on innovation: MetLife’s LumenLab in Singapore

To understand the ingredients needed to create a culture of insurance innovation, LII editor Ronan McCaughey recently spoke to LumenLab CEO and MetLife Asia’s chief innovation officer, Zia Zaman.

LumenLab was launched in July 2015 as the first-of-its-kind disruptive innovation centre for MetLife and the global life insurance industry as a whole.

Asked about the rationale for establishing LumenLab and its objectives, Zaman says consumers’ expectations are rising as "gold standard" brands enter into rich meaningful dialogues with them that are becoming more and more sophisticated.

Zaman says: "For example, if we look at the experience with Amazon or Netflix, their ability to create unique personalized experiences is fantastic. Let’s compare that with a typical financial services player, which says ‘here are our products. Contact us’.
"As we look at that expectation scale, [our industry] might end up being vulnerable to other companies and other brands that understand and engage with our customers more frequently about the things that really matter to them."

Zaman adds: "Research shows you don’t actually generate a lot of value from doing what everyone else is doing. You just simply keep up."