There is a positive correlation between product innovation that quickens speed to market and top-line growth. Based on Accenture analysis of carrier product development from 2008 to 2012 (figure 1), insurers with greater than five new product introductions had much higher direct premium written growth (+2 percent) compared with those launching fewer than five new product introductions (-2 percent).
Figure 1. Product rollout impact on direct premium written (DPW) growth
|US Commercial Lines Insurer Product Development Activity (Measured in number of new product introductions)||
Average DPW Growth
|Greater than five new product introductions||
|Fewer than five new product introductions||
Source – Accenture analysis based on information in carrier’s annual reports, AM Best data
Such a competitive reality, along with increased adoption of customer-centric business is compelling insurers to embrace product innovation to a greater degree. We are seeing more creativity in product offerings, including re-packaged products, need-based product enhancements, and segment-tailored new product introductions—think “pay as you drive” programs for auto or commercial liability packages for small- to mid-sized businesses. Source – Accenture analysis based on information in carrier’s annual reports, AM Best data)
Yet, findings from our recent survey of 559 insurance underwriters and product managers suggest that much more is needed to improve product speed to market:
- Only 28 percent of insurers are able to roll out new products within a six-month time frame;
- 40 percent still take 12 months or longer to rollout a product from idea to implementation;
- Only 45 percent consider their existing product development tools to be “very effective”.
Essentially, the insurance industry needs to invest to obtain new product development tools as well as to implement them well to support top-line growth.
Next week, I’ll suggest actions insurers can take to improve their product speed to market.