Increasing Speed to Market in the Insurance Industry [Podcast]Last updated: June 20, 2023 | 10 min read
GhostDraft’s CEO, Wayne Toms, recently joined forces with COVER Magazine’s Tony Van Niekerk for a podcast that focused on the importance of speed to market in the insurance industry. As a publication that has grown to encompass 26,000 professionals in financial service fields such as insurance, investments, financial planning, and risk management, COVER Magazine is at the forefront of current news regarding digital developments. With Tony’s extensive 28-year history in developing products and understanding distribution strategies within the industry, this collaboration was set to share insight relating to speed to market in the insurance industry.
Digital Transformation session with Wayne Toms, CEO of GhostDraft, focusing on the ‘speed to market in the insurance industry’ and host Tony Van Eikerk, COVER Magazine.
Tony Van Niekerk: Hi, this is Tony at COVER Magazine. I’m speaking to Wayne Toms, the CEO of Ghost Draft. Wayne, thank you very much for taking the time to talk to me.
Wayne Toms: Yeah. Hey Tony. Thanks for having me.
Tony Van Niekerk: Great. There’s a whole lot of talk in the market about insuretech. People are looking at how to facilitate the future of their business more than just finding a nice plugin. And one of the big things is with regards to obviously product development, especially in the larger environment. When it comes to the environment that we are currently operating in the insurance industry, speed to market as a competitive advantage is probably one of the most important factors. And so my first question to you is, why is there so much talk about speed to market? Why are people very interested in trying to find that sweet spot for their own business?
What is Speed to Market?
Wayne Toms: Yeah. Well, what is speed to market? Speed to market refers to the business priority of accelerating the opening up of new growth channels, whether it’s new products, markets, or ways of accessing those markets. And of course, reducing the red tape related to unleashing that growth. Specifically for insurance, speed to market has become very topical because of several trends that we’re facing in the industry right now. Firstly, in the tougher economic times that we found ourselves in right now, many customers have been looking for affordable insurance options. Therefore, insurers have been under pressure to find creative ways of reducing costs and fees.
This has opened up opportunities for disruptive competitors to enter the market, specifically ones that offer stripped-down products often directly to customers. Unencumbered by the legacy structures and systems that many of the more traditional products will be encumbered by. InsureTech competitors are also bringing insurance product innovation to market through advanced automation, straight-through processing, and AI.
Current Trends in Insurance
But this cost-competitive innovation pressure that I’m speaking about is also a driver for the growth in new channels to customers, including direct. I’ve seen some research that suggests that currently more than half of new personal lines policies are being sold direct. But in parallel to these trends, we’ve seen the drive towards elevating the customer experience.
This actually isn’t a new thing, but it’s no less significant. Modern consumers increasingly insist on interacting with service firms on their own terms. They’re accustomed to the simplicity, convenience, and ease of use of those channels. Many are also digital first, which means that they want to engage and conduct their business online. These trends are driving insurance carriers to tailor and in some cases even reinvent their product offerings. Therefore, there’s a need to manage this process quickly, efficiently, and insightfully. The prize for those who get it right, of course, is quicker access to new premium revenues and an opportunity for market share. I must just add that at GhostDraft, we’ve observed these trends in the South African market, but they’re by no means unique to us. We also see many of our international clients facing the same challenges.
Tony Van Niekerk: I mean, what we see is, you know, and I’ve seen it a few times with our InsureTech conference and people presenting there is that the technology innovation comes fast and furious and then that opens up opportunities for companies that they want to take advantage of. But now with all of this being available, what are the challenges then? Why do they have challenges and they simply don’t get that speed to market? What are the stumbling blocks that insurers face?
Speed to Market Roadblocks to Overcome
Wayne Toms: Yeah, it’s a good question. The reality is that insurance innovation necessarily requires the input and involvement and approval of a wide group of roles in the insurance business. Whether it’s marketing, actuarial, underwriting, compliance, it, legal, sales, distribution, operations, the full gamut. This is made more complex by the skills shortages that we face both in South Africa and in other parts of the world. This means the risk of IP loss, intellectual property loss, and this IP then needs to be recaptured through the innovation process, which of course takes time.
Another challenge that insurers face is that many of them are also somewhat impeded by their dependence on legacy IT systems. Of course, these systems are critical to their business, but they’re frequently inflexible and they’re very difficult to stretch to meet the new requirements that they’d like to be pursuing.
And on top of all of this, there’s the growth in compliance requirements and the fiduciary responsibilities of FSPs, which means that the barrier to entry for these new products is ever-growing and even once the product is launched into the market, it’s inevitable that there’ll need to be a period of in-market testing and rapid refinement, which further complicates the rate of innovation.
Tony Van Niekerk: So, okay, so now we know that it’s a challenge. We know that opportunities are available, and the technology is available. So what are the levers that you will pull to get that speed to market?
How to Increase Speed to Market
Wayne Toms: Well, I think Tony firstly, finding ways to bring together the full product innovation team and rethink how they collaborate, specifically to remove the lag times in product decision-making and approval rework cycles, for example, the wording of a new policy document for a new insurance line usually needs to be reviewed iteratively by multiple parties. This is a significant opportunity to save time with a more focused method of collaboration. Secondly, I would say a very important lever in increasing speed to market is the willingness to adopt new useful technologies, even if it requires integration into a third-party solution.
Many of our clients are considering making use of third parties for emerging insurance functions. For example, customer screening or readability scoring of communications, and then integrating these new services into their IT ecosystems for the new products that they’re developing. Another critical lever is the development incrementally if necessary, of a digital platform for customer interaction and ensuring that this platform can talk to my backend systems. Then, using this platform as an important component of all future customer solutions that I bring into the market to increase customer service levels while also harvesting useful customer data. Another lever is flexibility to make refinements to products that are already in market course corrections, if you will, to product rules and contracts, rates and pricing, sales, marketing tactics, and even processing operations.
And finally, ruthlessly rethinking the models for processing new policies and claims with a focus on reducing the operating cost per customer. The operating cost per policy, the operating cost per claim. This trend of straight-through processing, which aims to handle a customer interaction with one touch, is somewhat idealistic, but if that is possible, that’s getting a lot of focus currently.
Evaluating Speed to Market
Tony Van Niekerk: So, if you were to recommend to an insurer, how do they go about sort of evaluating how to get to speed to market? Where are their shortfalls and what should they be doing to get that speed to market?
Wayne Toms: Well, you know, Tony, at GhostDraft in our interaction with large American insurance carriers, we’ve noted a couple of key secrets of success, if I can put it that way.
In our most innovative customers, firstly, they’re moving from a designed-by-committee model, if I could put it that way, to a more asynchronous collaboration model. Underpinned by robust business logic where you define the process workflow for the new products, and then you use systems to manage each party’s interaction with the product innovation process as and when required.For us as tech providers, we also see how important it is that business users and not just IT teams have access to easy-to-use tech that they can use as part of the innovation process. In addition, these more innovative customers of ours would partner with new providers of solution components.
Building stuff internally may be safer, but it’s almost always significantly slower partnering in a controlled manner with solution providers, whether they relate to IT systems or processing services, that allows a faster route to insights and therefore to a viable product. That of course also means finding tech, which will allow such flexible integration with my existing systems. Typically, these are the cloud providers. These days, the successful innovators are also more willing to make mistakes as part of their new product journey as long as those mistakes can be caught quickly. So, this means being willing to trial new products in the market and refine them quickly, even after market launch, and they build in mechanisms into their product innovation process to track progress very quickly and allow them to make those cost corrections.
Particularly for more innovative insurance, loans of business or channels, some have allowed for a special amnesty. On the conventional business protocols, these new business areas have been given freedom to explore business processes and structures as well as systems that are not vetted by the constraints of the main business, as long as they adhere to compliance requirements, of course. This gives them a fighting chance at the nimbleness of their more disruptive insuretech competitors.
How GhostDraft Increases Speed to Market
Tony Van Niekerk: So now, as GhostDraft you obviously play in the space, but how do you speak to speed to market? What is your sort of approach to that and your solution now for speed to market? Because obviously, you don’t sell speed to market.
Wayne Toms: Well, GhostDraft enables insurers to get new products to market faster through our suite of document creation, automation, and distribution tools, which are fully integrated into leading policy administration systems. While our traditional focus has been on large and mid-size American insurance carriers, we’re increasingly seeing an appetite for speed to market and for our solutions in the South African insurance industry.
Tony Van Niekerk: So, your approach is now to provide your solutions to existing systems where they can plug in and use your system?
Wayne Toms: That’s, that’s right. Yeah.
Tony Van Niekerk: Ah, okay. Brilliant. Well, it sounds like a, a really good topic for us to explore at the next insuretech conference, so I’m hoping that you’ll be available.
Wayne Toms: Look forward to it. Thank you.
Tony Van Niekerk: Thanks, Wayne.
Wayne Toms: Thank you very much.
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