The pace of competition in the life insurance and annuity industry is moving at breakneck speed. With sales of annuities slowing primarily due to uncertainty about the U.S. Department of Labor’s fiduciary rule, insurance companies are hunting for innovative technology solutions to speed the introduction of annuities to market.
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A number of other institutional challenges are also contributing to this concern. Traditional sales channels of independent insurance agents continue to be the norm, despite efforts to kick-start innovation for new consumer demand models or direct sales channels. The process for purchasing products is long and laborious which leaves a sour customer experience taste. Huge legacy systems don’t allow for data integration, further stymieing advances in customer service. And financial structures and mindsets are rooted in a web of complexity, not providing room for digital transformation investments and expenditures to take hold.
Approaches for effective transformation through technology provide an important roadmap. As the development of new tools and technology platforms proliferate to ease this transition, it’s imperative that carriers understand the most impactful steps for new product introduction success to take hold. With that in mind, here are three technology strategies that should help issuers change their culture to evaluate, develop and launch new annuity products faster to get a jump on the marketplace.
1. Consider embracing a green field strategy.
The times, they are a changing. Historically, implementing transformation processes meant carriers needed to overcome obstacles with minimal options that at the same time didn’t go far enough.
In addition, carriers’ laboratory for innovation was padlocked as creativity was expressed and executed in a vacuum. Transformations could take years to foment, let alone be put into action, often disrupting business as usual with elevated costs amid risky methods with limited effective outcomes. On average, 50% of the ventures succeeded.
Fast forward to today when carriers can turn to another solution when considering how to bring transformation to life. A “Greenfield” approach, which opens up an endless wealth of opportunities for carriers, allows them to work inside a partner’s existing administration ecosystem to augment their existing knowledge base with additional external perspectives, while teaming up to activate a fast and low-risk transformation. By selecting and collaborating with a partner that has a well-established and leading-edge ecosystem and policy administration competency, employing a “Greenfield” approach allows carriers to launch a new Tier One ecosystem within nine months and new products in just 90 days. This trend is taking root as many carriers are increasingly creating internal divisions or spinoffs to tackle these initiatives.
2. Be a first mover.