Speed To Market Strategy: Tailor Product Filings To Each State
In our fast paced world and changing financial environment, the pressure to get insurance products to market faster continues to grow.
Everyone–agents as well as company executives and even regulators–wants to see that new products get into the marketplace quickly.
This pressure was behind the development of the “speed to market” initiatives that have been launched by state insurance regulators.
Still, the process takes longer than some people anticipate. This article will shed light on why, and what can be done to improve things.
In the area of product approvals, delays often occur in the complicated process of making filings and negotiating with regulators to achieve compliance when regulations vary from state to state.
Often, the cause of the delays has been the “top drawer” rules of the various insurance departments. A “top drawer” rule is one that resides in the regulators top drawer, to be referenced when reviewing a new product filing. It represents the insurance departments interpretation of the rules, regulations and codes for the state. Such rules have previously not been available to company compliance staff.
Another cause of delay has been product filing strategies that are self-defeating. If the filing strategy is to get the filing “out the door” as soon as possible, without configuring it to meet each states requirements, a long, drawn out negotiation process often results. Such a strategy may also result in return of the filing to the company–with a note saying the filing is inadequate.
Fortunately, the impediment to “speed to market” caused by top drawer rules is quickly disappearing. In the past year, at least 30 of the 50 states have changed or modified their filing requirements and more (Maryland and Minnesota, for example) have announced that changes are forthcoming. Their goal is to support the “speed to market” initiative.
In particular, most states have taken the steps shown in the chart on this page.
This speed to market initiative has shifted the burden of compliance to insurers. The product outlines and checklists are not necessarily required to be included in the submission package, but if they are included, it helps.
If regulators see that compliance personnel have put in a good faith effort to bring their products into compliance in the initial filing, it will speed the review process. Then, any negotiating should be on unique aspects of the product that may not be covered in the product outlines or checklists.
A good faith effort, of course, means that the correct fees, certifications, transmittals and/or an appropriate completed checklist is included in the submission, along with a policy form that has been revised to include any state mandated language and/or requirements.
To facilitate this process, states have provided, on their Web sites, the product outlines and/or product checklists, filing guidelines, and frequently asked questions or lists of dos and donts. The intent is to enable filers to avoid the common mistakes. Those materials have proven to be very helpful in preparing the filings.
In addition, many regulators are sending their comments on the submission via e-mail and allowing responses to be made in the same way. In our experience, this has significantly contributed to the speed to market initiative.
Furthermore, states are using their websites to educate insurance compliance personnel on the ins-and-outs of their states process.
They are also making an effort to streamline the review and approval process. This is being done by imposing time limits upon insurers–and upon themselves–for processing and responding to filings.
The message for the industry is clear: Insurance company executives–and the agents who sell, and sometimes help them develop, their products–need to understand that true speed to market can only be achieved by abandoning the old idea of sending the same filing package to all states, just to get it in the mail as soon as possible.
Compliance personnel must be given the time and opportunity to address a product submission to each state in accordance with that states requirements.
It is essential to recognize that the burden of compliance is shifting to the compliance professional, who must be given the tools to take on this burden.
The bottom line? To achieve the speed to market that everyone wants, the industry needs to develop realistic expectations about the total time it takes to get a product to market–from product inception to final approval. It also needs to support the new speed to market efforts of the states by adhering to website-posted filing guidelines.
Those who have done so have found that, although the effort required on the companies part is greater, the total time involved has already gotten shorter.
Sandra K. Meltzer, FLMI, CPCU, CLU, is president of Meltzer & Associates, an Atlanta consulting firm. Her e-mail is: firstname.lastname@example.org.
Reproduced from National Underwriter Life & Health/Financial Services Edition, February 4, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.