Overcoming Barriers to Protection Innovation
Nearly three quarters of UK households do not have a protection product, according to ABI. There is a real opportunity for providers to reach this mass-market, non-advised segment of the population, through D2C channels. However, in order to do so providers need to develop simple products that are designed around the lifestyle of the customer, with an emphasis on reaching the market quickly.
Why speed of innovation is important
The protection market is becoming increasingly commoditised. Providers need to react quickly to market demands, implementing new features and pricing structures within weeks, rather than months. The delivery of quality products, complete with full new business and servicing support, is critical in the consumer environment.
The non-advised market needs simple products, designed to meet a specific and easily defined set of requirements. Yet, the very nature of the D2C marketplace means that if a product doesn’t fit, customers will shop around until they find one that does.
The longer a provider delays product launch, or fails to meet the D2C market expectations, the higher the risk that someone else will get there first.
A report on new product innovation within the protection industry by RGA suggests that it takes six to twelve months to launch a new product. Risk products take seven months on average, whereas living benefit products take about nine months – ‘administration and illustration systems’ were reported as the top two areas causing bottlenecks for providers within EMEA.
Difficulties in adapting existing platforms to accommodate new products, or the costs associated with employing developers to rewrite core system software, can stall a project. The scope of a new product can even be compromised, as developers try to make an innovative product work with an incompatible system. It would seem that innovation is being delayed by the very systems on which essential new products need to run.
Providers that depend on a few key personnel to deliver the supporting IT capabilities may encounter additional complications. Competing priorities on an individual’s time can lead to delays or quality issues, which may compromise the ability to stay ahead of competing protection providers.
Reducing the risk of delayed time-to-market
Providers that remove the common barriers to innovation will shorten their time-to-market and deliver their products ahead of the competition. As barriers are often within core IT platforms, it is here that providers should focus their efforts.
Rather than adapting existing platforms, providers should seek systems that give them built-in flexibility to change product features without changing their systems. To stay ahead of the market, providers are increasingly ‘adopting’ proven capabilities within their core platform. This removes many of the risks associated with rewriting existing systems and enables providers to test the market with new products and make iterative improvements.
We think providers who have the ‘adopt, not adapt’ mindset will win the product innovation race. They will be in a position to continuously develop products that will help them succeed in the D2C arena.