With new life insurance products and features coming out at a break-neck pace over the last several years, life insurers may have felt like they were on a treadmill, with the speed slowly but steadily increasing.
The carriers’ growing reliance on independent distribution requires them to stay ahead of–or at least keep up with–their competitors if they want to stay on the shelf. Improving speed to market has therefore become a key component of life company strategy.
What have companies been doing to address this ever-increasing challenge? LIMRA conducted a study over the last year to find out.
On average, companies introduced 3 new products, revised 3 products and changed the rates on 2 products in the year leading up to the study. That’s 8 product development efforts of varying complexity underway over the course of a single year. And several companies had more than double that number.
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Given the ever-shorter shelf life for products (2 years or less for about half the companies’ term products), it’s not surprising that companies are searching for more effective ways to deliver new products to market.
Developing a new product takes time. The more complex the product, the more time it takes.
For example, on average, a new term insurance product takes 7 months from idea to launch (see chart). That just includes “Day 1″ systems functionality (Day 1 is what a company needs to have in place before the product is released). Adding “Day 2″ functionality adds another 3 months to the process.
To repeat, that’s just for term insurance. A new variable life product takes nearly 10 months from idea to launch. Add “Day 2″ and it’s more than a year.
The study also documented all the various steps in the process, when each step typically starts and how long it lasts. Updating IT systems takes the longest, followed by developing marketing plans and materials and product pricing.