Commercial Insurance Product Development Justin VanOpdorp ACAS, MAAA GE Commercial Insurance g

Introduction

Idea Generation Exploration Implementation How would I do it? Product Development Framework

Idea Generation Product Development

Comparison/Benchmarking of Competitors Customer Interviews Idea Generation Teams Data mining Claim Audits U/W Reviews for Emerging Risks Internet Research Employees Where do all of the ideas come from? Idea Generation

Initial Idea I have an idea: This is a good idea because: The main benefit of this idea: The main concern with this idea: One way to handle this concern: My next step: Source: Idea Champions, “Banking on Innovation”

Feedback Qualitative Approach to Product Evaluation How will management wade through each idea? Tools for idea evaluation Evaluation

Likes Concerns Suggestions LCS Approach Idea Survival versus Idea Killing Idea Feedback Source: Idea Champions, “Banking on Innovation”

Keeping Score Product Evaluation

Success for one does not guarantee success for another Utilize most promising ideas and modify to meet organization’s needs Steal the best, improve the rest Idea Generation No one best approach

Idea Exploration Product Development

Passion Leader Driver Organized Step #1: Identify an Owner Projects without owners lack focus Ownership

Product Definition Data Gathering Data Analysis Recommendation Quasi Due Diligence What do I need to know? Gathering Information

Marketing/Sales Claims U/W IT Legal Finance Input from all functional areas Expertise and team environment important Gathering Information Accounting Risk Management Actuarial Policy Processing Other Functional Areas

Who are my experts? What are the specifics of the product? Who are the target customers? How large is the target market? Does competition exist? What will my competitive advantage be? Price, service, innovation? What distribution channel will be used to market and sell the product? Who will be responsible for underwriting the risks? Which IT system(s) will we use? Do you know the answer? Be willing to ask a simple question Product Definition How will premiums be billed and collected? How will we rate, quote and issue polices? What policy forms and rates will be used? Internal or external claims handling? Are there any regulatory considerations? What data will be collected and stored? What are the risks of this product? What information do we need to monitor?

Internal or External Relevant Product Frequently limited internal data to support actual product. What sources of data are available? Data Gathering Internal or External Proxy Probably the most utilized Competitor filing, Bureau Data, Adjusted Internal Data Most overlooked, Good for reasonableness checks Non-related products, Internet, Publications

Understand the source of the data Make appropriate adjustments and relationships Quantify risk loads for imperfect information Analysis generally consists of many subjective assumptions due to limited information and data Actuarial Creativity Data Analysis

Provide Recommendation to Management in a consistent format Consistency Recommendation Minimize turnaround time Meets requirements of management Ease of Use

Implementation Product Development

Infrastructure Communication Plan Compliance Program Introduction Monitor Implementation

Distribution Channel Policy Forms and Rates Underwriting Risk Selection Policy & Premium Processing Claims Data Collection Plan IT Systems Billing and Collections Financial Reporting Foundation of Success Develop Infrastructure

Internal External Execution Additional Steps to Implementation Communication Regulatory Filings Legal Entities Compliance Pilot Achieve Goals prior to further release Introduction Production Profitability Monitor

Conclusion Product Development

Management Support Ownership Collective Project Infrastructure Expertise Data Collection No secret recipes Principles for Success