Session 71 WS, Understanding the Product Development Process. Moderator: Donna Christine Megregian, FSA, MAAA

Transcription

1 SOA Antitrust Disclaimer SOA Presentation Disclaimer Session 71 WS, Understanding the Product Development Process Moderator: Donna Christine Megregian, FSA, MAAA Presenters: Donna Christine Megregian, FSA, MAAA Larry N. Stern, FSA, MAAA

2 2017 Life & Annuity Symposium Donna Megregian, FSA, MAAA Larry Stern, FSA, MAAA 071WS: Understanding the Individual Life Insurance and Annuity Product Development Process May 2017

3 SOCIETY OF ACTUARIES Antitrust Notice for Meetings Active participation in the Society of Actuaries is an important aspect of membership. However, any Society activity that arguably could be perceived as a restraint of trade exposes the SOA and its members to antitrust risk. Accordingly, meeting participants should refrain from any discussion which may provide the basis for an inference that they agreed to take any action relating to prices, services, production, allocation of markets or any other matter having a market effect. These discussions should be avoided both at official SOA meetings and informal gatherings and activities. In addition, meeting participants should be sensitive to other matters that may raise particular antitrust concern: membership restrictions, codes of ethics or other forms of self-regulation, product standardization or certification. The following are guidelines that should be followed at all SOA meetings, informal gatherings and activities: DON T discuss your own, your firm s, or others prices or fees for service, or anything that might affect prices or fees, such as costs, discounts, terms of sale, or profit margins. DON T stay at a meeting where any such price talk occurs. DON T make public announcements or statements about your own or your firm s prices or fees, or those of competitors, at any SOA meeting or activity. DON T talk about what other entities or their members or employees plan to do in particular geographic or product markets or with particular customers. DON T speak or act on behalf of the SOA or any of its committees unless specifically authorized to do so. DO alert SOA staff or legal counsel about any concerns regarding proposed statements to be made by the association on behalf of a committee or section. DO consult with your own legal counsel or the SOA before raising any matter or making any statement that you think may involve competitively sensitive information. DO be alert to improper activities, and don t participate if you think something is improper. If you have specific questions, seek guidance from your own legal counsel or from the SOA s Executive Director or legal counsel. 2

4 Presentation Disclaimer Presentations are intended for educational purposes only and do not replace independent professional judgment. Statements of fact and opinions expressed are those of the participants individually and, unless expressly stated to the contrary, are not the opinion or position of the Society of Actuaries, its cosponsors or its committees. The Society of Actuaries does not endorse or approve, and assumes no responsibility for, the content, accuracy or completeness of the information presented. Attendees should note that the sessions are audio-recorded and may be published in various media, including print, audio and video formats without further notice. 3

5 Workshop What this is Open discussion of issues Active way to engage others to assist with problems/issues/concerns Interactive & not recorded You get out of it what you put into it If there is something you want to discuss, ask The less the presenters talk, the more you might get out of it Polling will be part of this 4

6 What is your primary area of product development? 1. Life 2. Annuity 3. Both life and annuity 4. Other 69% 13% 13% 6%

7 Have you read the final report or summary on Understanding the life insurance and annuity product development process? 1. Yes, final report (& summary) 2. Yes, summary only 3. Sort of (looked at some sections of report) 4. No 5. Don t know 16% 79% 5% 0% 0%

8 Key Study highlights 7

9 B2. Which of the following best describes the primary focus of your organization s life insurance product development strategy? (If your strategy varies by product type (e.g. UL vs. term), select based on your top selling product type) Strategy is not defined Cost leadership Focused differentiation (niche) Differentiation - fast follower Differentiation - market leader Quite a few companies have no defined strategy Prolific: Annuity Fastest:Annuity Annuity Prolific: Life Fastest:Life Life Small See definitions at beginning of report

10 Strategy What are the benefits/detriments of having a defined strategy? How does having a strategy improve your product development process? How does not having a strategy improve your product development process? 9

11 B9. On a scale from 1(weak) to 4(strong), how do you rate your product development process in the following areas? Life 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Weakest Strongest Most life companies rate themselves high in management, documentation and Sr. Mgmt engagement 1-weak strong Average (Right Axis) Life companies rate themselves low on consumer engagement or test marketing 10

12 B9. On a scale from 1(weak) to 4(strong), how do you rate your product development process in the following areas? 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Annuity Weakest Strongest 1-weak strong Average (Right Axis) 11 Annuity companies (like life) rate higher for management, documentation and Sr. Mgmt engagement, low on test marketing and consumer engagement

13 Is your product development process held up consistently in one area? If not consistently in one, where does the process seem to stall? Do you understand why it does? What can you do about it?

14 International Survey*: What areas are the largest bottlenecks? (Area 1 = largest bottleneck, Area 2 is second largest, etc.) Savings Products Risk Products Other Other UW Finance RI selection UW Finance Prod-Contract Marketing Governance IT-Illustration Pric-Docum Pricing-Assump Reg approval Area 1 Area 2 Area 3 RI selection UW Marketing Prod-Contract Pricing-Doc Governance Reg Approval IT-Illustrations Pricing-Assum Area 1 Area 2 Area 3 Prod-Design Prod-Design IT-Admin IT-Admin IT-Admin greatest bottleneck, followed by product design for both savings and risk products *International survey completed by RGA in 2014; RI selection = reinsurer selection 13

15 Where have you spent time improving your product development process in the last year? Idea generation Product concept and feasibility Planning and design Underwriting Project management Product pricing Risk management Peer review Marketing plan IT day 1 IT day 2 Business procedures Assumption governance State filing Tracking results vs plan 14

16 B12. In what area(s) has your company improved its product development process in the last 2 years? Product Development Process Speed/ More efficient process Added Resources Added Management/ oversight Enhance/ updated Technology Innovation Idea generation 14% 34% 26% 4% 32% Product concept and feasibility 22% 32% 26% 4% 16% Product planning and design 36% 32% 34% 4% 12% Establish Underwriting criteria (life ins only)* 14% 6% 10% 14% 22% Project Management 34% 36% 20% 4% 10% Product pricing 38% 28% 16% 18% 6% Risk Management 4% 24% 28% 8% 0% Peer Review 10% 18% 24% 4% 0% Marketing plan 16% 12% 6% 10% 6% IT day 1 28% 12% 8% 14% 10% IT day 2 20% 8% 12% 8% 4% Business Procedures 22% 12% 12% 10% 6% Assumption Development/governance 16% 28% 46% 6% 2% State Filing 42% 10% 10% 8% 2% Tracking results vs Plan 8% 10% 26% 8% 0% Indicates where most respected companies have improved processes the most in the last 2 years Indicates where small companies have improved processes the most in the last 2 years Stars show most popular answers among all companies. *Full stars represent where the most efforts have been made in 2 years 15

17 What parts of the product development process do you feel you could gain more efficiencies or improve? 16

18 Duration and Timing of Product Development Steps Idea Generation Product concept/feasibility Underwriting guidelines Assumption development Product planning & design Traditional rider development Living benefit rider development Product pricing Reinsurance State/regulatory filings Update business procedures Marketing plans Update IT - Day 1 PRODUCT DEVELOPMENT Update IT - Day 2 Term Insurance New Products All vs. Fastest All Fastest Weeks Phases of product development process not always in exact order performed by all companies. Length of bar means duration of the phase. Left edge of bars means estimated start time of the phase. 17

19 Duration and Timing of Product Development Steps Idea Generation Product concept/feasibility Underwriting guidelines Assumption development Product planning & design Traditional rider development Living benefit rider development Product pricing Reinsurance State/regulatory filings Update business procedures Marketing plans Update IT - Day 1 PRODUCT DEVELOPMENT Update IT - Day 2 Term Insurance New Products All vs. Fastest vs. Respected All Fastest Respected Weeks Phases of product development process not always in exact order performed by all companies. Length of bar means duration of the phase. Left edge of bars means estimated start time of the phase. 18

20 Duration and Timing of Product Development Steps Product pricing Term Insurance New Products All vs. Fastest vs. Respected Key Differences All Fastest Respected Update business procedures Marketing plans Update IT - Day 1 PRODUCT DEVELOPMENT COMPLETE Weeks Phases of product development process not always in exact order performed by all companies. Length of bar means duration of the phase. Left edge of bars means estimated start time of the phase. 19

21 Duration and Timing of Product Development Steps Idea Generation Product concept/feasibility Underwriting guidelines Assumption development Product planning & design Traditional rider development Living benefit rider development Product pricing Reinsurance State/regulatory filings Update business procedures Marketing plans Update IT - Day 1 PRODUCT DEVELOPMENT COMPLETE Update IT - Day 2 UL/ULSG New Products All vs. Fastest All Fastest Weeks Phases of product development process not always in exact order performed by all companies. Length of bar means duration of the phase. Left edge of bars means estimated start time of the phase. 20

22 Duration and Timing of Product Development Steps Product planning & design UL/ULSG New Products All vs. Fastest vs. Respected Key Differences All Fastest Respected Product pricing Marketing plans Update IT - Day 1 PRODUCT DEVELOPMENT COMPLETE Weeks Phases of product development process not always in exact order performed by all companies. Length of bar means duration of the phase. Left edge of bars means estimated start time of the phase. 21

23 D1a. : For the development of a new Life Insurance product, does your company outsource any of the following process steps? (Life Only) % Yes (of 30 companies) Type of Services Outsourced Project mgmnt and co-ord IT illustration systems IT administration systems Marketing and launch prep Contract drafting/filing Peer review Assumption development Product pricing/modeling Underwriting guidelines devlpmnt Product design and technical feas Concept and high level feasibility Idea generation 0% 10% 20% 30% 40% 50% 60% Project mgmnt and co-ord IT illustration systems IT administration systems Marketing and launch prep Contract drafting/filing Peer review Assumption development Product pricing/modeling Underwriting guidelines devlpmnt Product design and technical feas Concept and high level feasibility Idea generation Other group entities Reinsurer Actuarial consulting Ind contractors Not know Other 22

24 D2a. : For the development of a new Life Insurance product, does your company outsource any of the following process steps? (Annuity Only) % Yes (of 25 companies) Type of Services Outsourced Project mgmnt and co-ord IT illustration systems IT administration systems Marketing and launch prep Project mgmnt and co-ord IT illustration systems IT administration systems Marketing and launch prep Contract drafting/filing Peer review Assumption development Product pricing/modeling Product design and technical feas Concept and high level feasibility Idea generation 0% 10% 20% 30% 40% 50% 60% Contract drafting/filing Peer review Assumption development Product pricing/modeling Product design and technical feas Concept and high level feasibility Idea generation Other group entities Reinsurer Actuarial consulting Ind contractors Not know Other 23

25 How do you use predictive modeling in your product development process? A. Marketing plan B. Assumption development C. Inforce analysis D. Underwriting E. Product pricing F. Product concept & feasibility G. Product planning and design H. other 0% 0% 0% 0% 0% 0% 0% 0% 10 A. B. C. D. E. F. G. H. Countdown

26 B11. For which steps of the product development process is your company currently using predictive modeling (PM) or beginning to explore the use of predictive modeling? 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 16% 36% 47% 59% 59% 88% 68% 28% 42% 75% 77% 25% 21% 24% 18% 16% 13% 31% 0% 19% 20% 9% 6% 3% Marketing plan (target market/cross sell) Assumption Development In force Analysis Underwriting Other Product pricing Product concept and feasibility (+) Currently Using (-) Currently Using Exploring Neither Product planning and design Underwriting is the most explored area for predictive modeling; marketing is where predictive modeling is currently leveraged the most 25