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For insurance companies that span various sizes, regulatory environments, and countries, the product development process embodies their strategy, value proposition, and longterm competitiveness. It is a creative, interdisciplinary activity that transforms a market opportunity and technical capabilities into products that meet distribution and consumer needs - while adding value to the company's bottom line. As companies strive to become more nimble, and as innovation accelerates to accommodate ever-changing market conditions, regulatory standards, and secular growth trends, product development outcomes are becoming more crucial to these organizations' financial well-being.
To improve the product development process, one would do well to fi rst understand its current components. A recent research project sponsored by the Society of Actuaries and conducted by RGA and LIMRA seeks to provide the insurance industry a guide to help enhance resource management and current processes to better serve the needs of its stakeholders. This article highlights key findings. Please note the data was segmented by:
* Companies that write life insurance, annuities, or both
* Small companies relative to large companies
* The fastest, most prolific companies (issuing most products) and the most respected companies (as chosen by respondents)
* Company type (such as stock, mutual, or other)
Strategies and Process
Companies were asked to indicate their primary product development strategy, from wanting to be a lowcost leader in the marketplace, a niche market leader, or a broad market leader to a quick reactor to market changes (Figure 1). Not having a clearly defined strategy for the life insurance or annuity product lines may not impede the overall product development process, however.
Among the five fastest and five most respected companies, some indicated they had no clearly defined strategy for their product development process. Also, companies without clearly defi ned strategies did not report launching fewer products or lagging in development. Note that companies responding "strategy is not universally defined" for their life or annuity product line may indeed have strategies tailored to specific products within the line, but not a consistent strategy for the product line overall.
Of companies that did choose a strategy, fast-follower and niche strategies were most common. Fast followers gain the advantage of not initially paying for innovation, but they must work quickly to react to market changes...