January 6, 2023

By: Prakaash Kumaar Subramaniam and Subrata Das

Today’s customer expectations drive insurers to introduce innovations in product development and roll out products in a faster time-to-market to stay ahead of the competition. Insurers are moving from the ‘Product centricity’ to ‘Customer centricity’ product model where the features are defined based on ever-changing customer needs and market trends. Are the insurer’s systems fully dependent on IT for faster time-to-market? How can insurers bring agility in product development and emerge successful in their strategy? This blog analyses the need for moving away from an IT-driven customization model to a business-driven configuration model of product development.

Impact of customization on the traditional product development process

Insurers have been facing hardships in managing their books of business in disparate applications in their IT landscape for years. Due to changing marketing conditions and technological improvements, insurers are moving away from their legacy systems to Commercial off the Shelf (COTS) products. These COTS products are modularized and can readily fit into the insurer’s IT landscape with a varied degree of customization based on the products offered. This enabled them to launch new products in faster times when compared to that of their legacy models.

Customers’ expectations and buying behavior are changing in recent years, forcing insurers to introduce innovations in product design. The traditional distribution and servicing channels are being replaced by digital channels. When the insurer wants to introduce changes to products, they invest in heavy customization of the current COTS applications, resulting in huge effort and cost. Often, to accommodate new features and processes, IT vendors end in hard coding, which makes it difficult to trace changes within the system and view comparisons between versions.

When it comes to testing, the QA team needs to rely on the IT team to define the test scenarios and generate test cases. The testing team will have to limit their activities due to system limitations, ending with post-product defects for scenarios that would have not been tested during pre-UAT or UAT.

How a configuration-driven approach can help transform the product development process

In a configuration-based policy administration system, changes to products are configured using business rules, without changing the source code. The business users collaborate with IT for product development and enhancements, thus reducing the dependency on IT in the product development life cycle. Also, the time taken for product rollout is considerably reduced compared to customization mode. The flexibility of modularizing products to feature levels and managing the business rules to their lowest eases the product configuration by business users. Moreover, sharing of features and rules across different products and lines of business enables insurers to define common business models among entities across the globe.

As business users are the key players in product configuration, the dependency on IT SMEs or product analysts is eliminated/minimized.

What are insurers doing currently to make product development more configuration-driven rather than customization?

A few insurers have implemented standalone product configurators that enable business users in insurance product development activities, including product modeling, and testing. Once the product has been developed and approved by the product management board, its details can be automatically exported to core policy administration systems and peripheral systems. This avoids duplication of efforts in plan configuration and product configuration errors.

Today, many COTS products have product configurators as part of their packaged solution, and this helps insurers manage an enterprise product repository for products across all lines of business. To name a few, Duck Creek’s Low Code Configuration, Guidewire’s Advanced Product Designer, Majesco’s STG Product Modeler, and DXC’s Product Accelerator are product configurator modules in their product suite which relieve the insurer of duplicating the product configuration as integrations are established between product configuration and other modules.

Insurers who have built their suite of systems and want to achieve faster time-to-market are looking for a simplified product configuration system that will manage all products, business rules, and processes. They want the product configurator to co-exist with other applications in their ecosystems and automate the processes, thereby minimizing the manual interference in the entire product configuration and management process.

Moreover, insurers are moving from the ‘On-Premise’ mode of hosting applications to ‘Cloud-based’ architecture to bring cost efficiency without comprising security. During the transformation process, insurers re-engineer their business process and bring uniformity across lines of business. This helps insurers define a lean and strategic business operating model with operational efficiency. The cost saved is being diverted towards product innovation and technological advancements to stay ahead of their competitors in the region they operate.

LTIMindtree’s offering on accelerating product releases to the market, MindPronto, brings differentiation in product ideation, design, configuration, and testing process using a ‘Lego’-like building block approach. The solution works on the principle of decomposing products, coverages/benefits into features. These features are brought to life through business rules associated with them and are rolled into templatized definitions of products and coverages, referred to as templates within the tool. These templates are utilized to instantiate the product (plans) and coverages that are sold into the market.

The tool helps in configuring new products and coverages faster, associating business processes and test scenarios to product and process hierarchy, and adopting a reusable approach towards product definition for every product launch/update.