One of the tasks of product managers in insurance companies is often looking after a specific part of the product portfolio. This means a multitude of different tasks and goals, so it is impossible to imagine doing such a pile of work without a well-thought-out strategy and support of new technologies. And since the chances for the implementation of a product strategy depend to a large extent on the share of technology, it becomes important that every employee, i.e. product specialist, feels co-responsible for its implementation also in this respect.
Identify strategic products and the degree of their manageability
For any action to make sense, every insurance company must identify strategic products. Such are the recommendations for insurance companies issued by local supervisory authorities. These products are usually defined as those which “due to the amount of the total expected or collected premium or a significant number of customers, are of significant importance for the activity, scale of potential liabilities, the results of operations or reputation of the insurer” [Polish Financial Supervision Authority, Recommendations for insurance companies].
A well-thought-out strategy and creating a list of strategic products is an approach to business focused on building financial stability with growth perspective that is especially appropriate these days, in times of instability. Of course, there are no products that will ride the never-ending rising tide, so you should look at the product portfolio in detail and manage it consistently, reacting to market behavior. A significant part of the work is taking care of sales tools, where improvements are sometimes implemented more often than in the product ranges themselves. The need for change is often urgent, and outdated systems are an obstacle to flexible change management.
Identify the main blockers
Customers and agents don't like change, but it’s unavoidable, especially in a highly competitive market like insurance. So before any decision is made – e.g. to withdraw a product from the market – all possible consequences should be considered.
What should we start from when working with insurance products? From a thorough analysis of the profitability of each product. It is not only about benchmarking against the results of the entire group of products, but also about a detailed analysis of the structure, any changes and the reasons for these changes at the level of each type of costs (fixed, variable) in the short and long term, including aspects such as the product lifecycle, historical changes or seasonality.
There is a reason for such meticulousness. It often turns out that the problem with product profitability does not necessarily lie in the high claims ratio, but also in errors – e.g. in the allocation keys for shared costs for products or in sales paths, and even in reports on which we rely when making strategic decisions. Sometimes in such analyses you have to go down to the individual invoices.
Errors in the allocation keys for shared costs for products
As for errors in the cost allocation keys, it is best to verify their correctness in each settlement period (e.g. quarterly). It may turn out that the costs were mistakenly allocated according to an unfavorable key, e.g. according to outdated data from the period when a given product was still a priority, but no more. In result, you can see high costs in the profitability analysis, e.g. for global company projects, which significantly affect the product’s performance. Such mistakes are an easy trap when the raw data is taken and then processed manually, while the whole process could be programmed and automated, giving reliable data without undue delay.
Errors in sales paths
As for errors in sales paths, apart from the classic mistakes in assigning the appropriate rates for individual elements in the range, there are also errors in the algorithms for calculating discounts, etc. Each case undoubtedly affects product profitability. Most of them could be avoided and quickly remedied if all sales platforms were equipped with user-friendly business administrator applications in which changing parameters or tariffs can be done easily even by non-technical users.
To make it even worse, errors also occur in the reports on the basis of which important decisions are made. These errors include, for example, duplication of data – especially in old systems that lack appropriate functionalities to verify data. Such systems also often lack a built-in reporting function, and there are plenty of ready and tested technological solutions available on the market that automatically aggregate and analyze data without the need for manual operation and incurring horrendous costs.
Make a viable plan and act
Once you know what's not working, it's time to make a plan. If it is to work, there are a few things to keep in mind.
You shouldn’t try to do everything at once
The starting point is to identify problems, prioritize them and solve them consistently. This should be done step by step, otherwise it will be difficult to assess which remedy actually affects the performance of the product to what extent.
Don’t expect improvement right away
When waiting for the results, it is best to take a realistic time perspective, even a long-term one. For example: diagnosing a low level of product knowledge in the sales team and applying a countermeasure in the form of an extensive information and training campaign is a task to spread over many months, to which several more months should be added for applying the acquired knowledge to work.
It is worth trusting experts
It is worth investing in cooperation with professionals: UX/UI designers, IT suppliers, trainers, research companies, etc. Their expert knowledge and experience can save you time and money and prevent your attempts to implement projects doomed to fail due to the lack of appropriate competences.
A product roadmap will come in handy
As a child document to the company's strategy, the so-called roadmap should help to achieve its main objectives. It is a tangible source of information about the product history. Joint creation of the roadmap with other departments increases its legitimacy and the chances of its implementation. This helps you focus on tasks that affect the implementation of the company's strategy instead of wasting resources.
The plan vs. technological feasibility
Whatever is decided must be technically feasible. Outdated systems are usually the main obstacle in the implementation process of many projects. Their lack of flexibility makes it impossible not only to provide quick changes, but also results in the inability to make any changes at all. History knows of the giants for whom it turned out to be fatal. Being up to date technology-wise may therefore turn out to be also indispensable in the insurance industry.
Decisions made collectively only
In the analysis of profitability, numbers are only a fragment of the bigger picture, so all assumptions should always be consulted with other departments. Collaborations with other departments and official requests for approvals are good practice. Gathering comprehensive knowledge about the product on your own is impossible. It will be much faster and more effective to use the knowledge that has already been accumulated in various departments of the company. Sometimes even a hint from a friendly department can save you some serious trouble.
Be careful with simplifying product portfolio
It’s worth some considering whether simplifying the product portfolio, which has been trending in recent years, is suitable for you. It is certainly a great approach for the established, highly recognizable brands such as Apple or McDonald's. Nevertheless, these companies continue to develop their product offer. The former is known for its cyclical premieres, and the latter for seasonal novelties. They test their solutions and, of course, at some point they stop selling individual products. The question is, however, should you risk losing a customer by changing the offer in a highly competitive insurance industry, where it is difficult to talk about an established position. When McDonald's changes the menu, the customer will simply choose a different sandwich, but in insurance they may leave you and choose a competitive product. At the same time, you should certainly avoid situations in which, after presenting many similar solutions, the customer still wonders why they were even sold this particular product.
Technology in service of strategy
Technology and strategy are the topics that seem distantly related at first, but in reality they strongly correlate. Technology has moved forward, and with it the automation of many processes. CRM supports the process of customer segmentation and productization, AI helps generate product recommendations and automate claim handling by recognizing and interpreting photos sent by the aggrieved, cloud technologies increase the availability of sales platforms and their updates and upgrades, omnichannel eliminates restrictions on cross-channel sales, etc. All this aims to build positive customer experience and implement the strategy. It’s no longer used to stay ahead of the industry, but to stay in it.
There are plenty of ideas for product development. Yet, not all of them can be implemented if we operate in a technologically limited environment, in which there are more and more development blockers and the possibilities are melting away. An electronic policy can solve the problem of a paper policy, waiting in long queues for IT support with changes in products is eliminated thanks to the configurator in the business administrator application, storing data in many systems is replaced by a front-office that accumulates it in an accessible way on one screen, and the growing need for self-service is satisfied with a friendly and multi-functional customer portal. There are concrete solutions to almost all problems today.
So, if the prospect of moving away from constraints towards possibilities is tempting, but the budget seems to be too low – it is still worth asking suppliers about their ability to adapt to insurers' resources. In no way should the technological progress of the industry be stopped, because it becomes the driving force for its success. And even the most talented strategist will not help in this regard, because while the use of the right strategy is extremely important, without the right system tools even the best strategy will be difficult to defend.
Product Marketing Manager at Comarch