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New Products, Special Delivery

Pat Speer June 2006

Competition, regulatory compliance and cost cutting still drive life insurance product lifecycle management (PLM).

To remain competitive in an economy with a demographic of escalating baby boomer prospects, developing and maintaining a constant flow of new product offerings requires agility, expert communication between work groups and technology to support the effort.

But are carriers taking advantage of the most efficient processes and technology? As some insurance companies evaluate the promise of new PLM technologies, they are discovering the give-and-take that must occur between IT and product development teams.

"Many companies use PLM for strategic advantage," says Kimberly Harris-Ferrante, research vice president, Financial Services' Insurance Industry Advisory Service, Gartner Inc., Stamford, Conn. "Even though a lot of carriers are involved in do-or-die projects, not all view it as a necessity."

Whether the merits of PLM are appreciated is a matter of perspective. Harris-Ferrante confirms that whether they recognize it or not, most carriers have PLM processes and technology in place: Some use it for internal controls, while others use it to increase speed to market.

"Most have some tools or technology to help with product development," she says, "but a lot of this type of technology is being used more for organizing and keeping a product library-coverage levels, components of a product in development, etc. Using PLM technology in this way is more to help organize the product. Some carriers are using it to assist with pricing and actuarial functions, but not necessarily to get a product to market."

THE BIGGER PICTURE

As Tom Doruska sees it, the challenges inherent in bringing an insurance product to market are shared industrywide, and not all are technology-based.

As vice president, life product development at AmerUs Group, a 110-year-old Des Moines, Iowa, provider of life and annuity products, Doruska is responsible for execution of the product development process. His team coordinates work with functional groups such as legal, compliance, human resources, actuarial, marketing, field, operations and others.

"We tend to look at the bigger [PLM] picture, because being able to provide efficient and continuous product development in light of industrywide regulatory issues, we are challenged, like other companies in our space, with staying on top of the systems and staff required to remain competitive. We know that this level of focus and activity in the industry will continue."

In order to bring a new life product to market in the company's typical six- to nine-month lead time, Doruska's team follows its own strict, four-step PLM process.

Phase one includes evaluation of a rough proof of concept from sales and marketing; phase two includes creation of a pricing model and product specification; phase three involves a two-week window in which corporate IT provides final analysis and system modification review and works with other departments to create the business forms, filing, customer service elements, etc; and phase four involves completion of system building, policy form filing and the marketing that will go into the product's introduction to the marketplace.

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