Insurance product designers who want to help fight COVID-19 should consider what they can do quickly, and what they can do with a product that might take more time to develop.
Taylor McKinnon and Pamela Handmaker talked about their insurance product design ideas Monday, at a session at a Society of Actuaries (SOA) health insurance conference that was held online, due to COVID-19.
McKinnon is a compliance consultant at Milliman.
Handmaker is senior director of product and innovation at Trustmark Benefits.
For a health insurer eager to do something now, “one of the options is just developing a new product,” McKinnon said. “But developing a new product takes time. Is that a quick enough approach?”
In many cases, McKinnon said, there’s a simpler, faster way: Showing consumers and employers that there’s an existing product that can already meet their pandemic-related insurance needs.
Supplemental Health Benefits
Designers of the kinds of major medical insurance policies that many people get at work, or through the Affordable Care Act public exchange system, must follow strict ACA benefits rules.
Designers of other types of health insurance products – such as disability insurance, dental insurance, critical illness insurance and hospital indemnity insurance – fall outside the scope of the ACA rules. Designers of non-ACA health insurance products must comply with state insurance regulators’ rules, but, in states with flexible rules for “excepted benefits” products, they may be able to come up with a much wider range of products.
In Texas, for example, a startup, Clara Insurance, is working with an arm of Reinsurance Group of America Inc. to offer a group “critical illness insurance policy” with benefits that can be triggered by urgent care visits for more than 10,000 different conditions.
How to Invent an Insurance Product
McKinnon suggested that, for health insurance product designers who want to address a crisis like the COVID-19 pandemic, one strategy might be to start by positioning an existing product as a solution now, introduce a basic new product a year or two later, and then work on improving the new product.
For the entirely new product, the company should try to design a product that could be useful to people dealing with conditions other than COVID-19, in case the COVID-19 outbreak fades away, McKinnon said.
Here are five other recommendations McKinnon and Handmaker had for supplemental health product designers.
1. Think about what people need.
Think about whether there’s a way for a health insurance product to meet that need. ” “ Child care kept coming up,” McKinnon said. He said it’s not clear that a health insurance product can pay for child care for a healthy worker who must work at home due to a quarantine or isolation order.
2. Analyze how much effort developing a product would take.
Handmaker said she asks, “Can we do it on time? Can we do it on budget?”
3. Validate a proposed product’s market appeal.
Handmaker said she talks to a wide range of people, including sales reps and brokers, and organizes customer focus groups and surveys before investing a lot of time and money in developing a product idea.
Information technology people, actuaries and other people at the company also play a role in validating products, Handmaker said.
“If there’s not tension, you’re doing something wrong,” Handmaker said. ‘You’ve got to challenge each other.”
Handmaker said having a simple way to explain what a product does and why someone would want it is also important.
If a product would be hard for agents and brokers to explain, “maybe it’s not the right thing,” Handmaker said.
4. Make sure the ‘realistic’ version of a products meets customer needs.
In some cases, McKinnon said, product design decisions made to hold down claim costs, or meet other practical objectives, may keep the product from doing much for the customer.
5. Know actuaries who can use spreadsheets.
Some audience members asked McKinnon and Handmaker what tools they use to figure out, for example, where product fit on a graph comparing how likely a product is to produce rapid sales growth versus how easy it would be to create.
McKinnon and Handmaker said what they usually is to talk to an actuary who can make Microsoft Excel create nice charts.
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