Keeping up with the pace of change is one of the biggest challenges facing property and casualty insurers today. In a digital age, new risks emerge rapidly and insurers must be able to keep up.
In commercial lines, for example, some insurers have moved quickly to add cyber security and financial crime coverage to standard business-owner packages. They have established actuarial standards, set pricing and put rating and processing systems in place, in as little as three to six months. This surpasses the 12 to 18 months that has been recognized as the “normal” speed for the development and launch of new products. Other insurers have moved quickly to create new products in areas ranging from travel insurance, to coverage of epidemics such as Ebola, to warranties on smart appliances.
This environment favors carriers that can conceptualize, develop, test and introduce products at high speed. Insurers no longer have the luxury of long lead times and slow, cautious product rollouts. The ability to do this quickly can be learned, but some basic elements must be in place. These include technological sophistication, organizational efficiency, strong internal governance and good coordination of different operating functions.
In my next two posts, I will talk about some of the other implications of rapid product innovation and how it can serve as a competitive advantage for insurers.