EXCLUSIVE: “The High Five” – Dan Woods, Socotra in ‘The Insurtech Magazine’
Dan Woods, Founder and CEO, Socotra, sets out the key steps for launching a successful insurance product
Around the world, the insurance industry faces myriad challenges, ranging from a rapidly evolving technology landscape, to minimising product maintenance costs, to adapting to consumer behaviours and preferences, shaped by today’s digital-first world. Against these growing headwinds, it’s more important than ever that insurers remain competitive and innovate at speed. The majority clearly agree. In a KPMG study that interviewed 1,325 chief executives across 11 major sectors, including insurance, 75 per cent said that they have an aggressive digital investment strategy that’s intended to secure first-mover or fast-follower status.
The insurance market may be ripe for disruption, but actually capitalising on the opportunity can be difficult. The industry maintains high barriers to entry, heavy regulatory obligations, and is populated with well-established competitors. Survival for carriers depends on their ability to launch new products and services fast, and on budget, while tailoring them to evolving customer demands.The traditional incumbent approach of spending several years and millions of dollars on product development isn’t viable in today’s fast-paced insurance environment. It’s not only inefficient – it also leaves your business trailing the competition.
“In insurance, agile is still a relatively new and uncharted concept”
Insurers must forge a new path, powered by agile methodology. By maximising resources and continually iterating towards a best-fit product, an agile approach can be a significant differentiator for insurance innovators. But in insurance, agile is still a relatively new and uncharted concept.At Socotra, which was founded in the US in 2014 and is currently expanding throughout the UK and European markets, we’ve spent time in the trenches with many of the world’s top insurers, giving us insight into what makes for a successful product launch. Here are five hard-learned lessons – including from our highly competitive home market in the US – which both carriers and insurtechs can use to gain an edge.
1. Go live quickly with a minimum viable product (MVP)
Historically, insurers have taken a rigid waterfall approach to bring fully developed products to market. Today, you can’t afford to take such a lengthy and expensive route to product development. Instead, you must get live fast with an MVP and start selling policies – because until you have a customer, you are only working with a market hypothesis and not actual data.Learning moves exponentially faster once a product is live.
By viewing the product launch as a starting point in the development journey, not the destination, insurers can test market assumptions by gathering data from real prospects and customers. They can then take what they learn and quickly iterate to develop a more customer-centric product.Generally, the minimum features required for an MVP are data collection (to capture policyholder information), rating (to determine premiums), underwriting (to assess risk), documents (to support contracts and legal requirements), and payments (to collect premiums and pay out claims).Not all MVP features need to be fully built and automated. Avoid delaying a launch so that you can build out a function that can just as easily be done in Excel or another manual tool.
2. Be hyper-responsive to customer feedback and needs
Your MVP has reached its Day 1 milestone: selling policies. Now it’s Day 2, you’ll have a host of fires you’ll need to put out in terms of smoothing processes and meeting customer needs. While an agile approach accelerates your learnings and creates a customer-centric feedback loop for your product, it also demands responsiveness from your team, post-launch.Renewals, for example, is a common fast-follow feature. Most customers will renew monthly or annually, giving you ample time to build out this feature. Most types of cancellations can also likely wait until Day 2 (unless you have an admitted product like personal auto insurance, where it’s required).3Iterate on manual processes Agile methodologies concentrate on minimising waste while maximising results.
Many startup leaders mistakenly believe automating as many processes as possible will help them stay lean and save time. However, in certain instances, it makes sense to perform a quick fix instead of automating.In one example, a customer went live without automating a data-source integration, which meant manually typing. As a result, they discovered that the data source wasn’t very good and they switched to another within a few weeks. Good thing they didn’t delay launch to automate integrating with the original data source. Innovating bad or ineffective processes with automation can result in positive results, such as more easily scaling the business.Manual processes aren’t always bad. They’re crucial tools to apply the feedback signals received from customers.
They enable you to tweak, substitute, or eliminate inefficient processes quickly and affordably. In fact, manual processes are the easiest and simplest to iterate on, so avoid prematurely automating a manual process before validating the benefit of doing so.
4 Prioritise like a maniac
You’ve gone live fast, responded to feedback with feature updates, and preserved manual processes to maintain your focus on the most mission-critical objectives. But where you spend your time, talent, and capital still determines your survival and growth, even as your resources expand. Ruthless prioritisation will allow you to continue making product improvements while supporting customer and market demands.Automating manual processes can unlock massive gains in productivity, performance, and customer satisfaction.
Yet knowing which processes to replace, and in what order, is more complicated than it seems, so make sure you have a prioritisation roadmap.Different products demand different prioritisation. For example, claims may surface as a top priority for an auto product, yet it will be a lower priority for a life insurer, which may not receive a claim until months after launch.
5 Choose technology that enables agile methodology
Agile methodology requires agile technology. That means using a multi-service architecture that can maximise the impact of lean operations, rather than a monolithic incumbent system that prevents a nimble team from adapting to market demands in a timely, cost-effective, and non-disruptive manner. Multi-service architecture enables you to take advantage of best-of-breed technology to create a dynamic, always-up-to-date platform with enormous flexibility and resilience to change – it can put leading technology and services at your fingertips without custom coding or downtime for upgrades.
Multi-service platforms allow you to tailor your own platform to meet market demands quickly and easily, reducing implementation time and costs whilst making it simpler to accelerate product launches, test and iterate a live product, and begin raising additional capital.The insurance landscape is modernising rapidly, with innovative new products being launched at remarkable speed. Over time, this trend will only accelerate. The five lessons outlined here will enable insurers to keep up with this pace of innovation.
Socotra helped one of the top three global insurers to use the methodologies discussed here to launch an embedded income protection product for drivers of a leading rideshare company. Accessed directly through the rideshare app, drivers can sign up for flexible business interruption coverage in a few clicks, and their premium is then automatically collected from completed trips. Socotra enabled the insurer to implement a new technical platform and launch the product in only six months – three times faster than it’s likely to have taken with a legacy core system.The implementation team was made up of just 10 members, thanks to Socotra’s easily configurable platform.
The Socotra Connected Core leverages Cloud, open APIs, and a powerful data model, giving insurers the freedom and reliability to launch products through any distribution channel, while the Socotra App MarketPlace offers a click-to-run experience that enables insurers to add new features and third-party software without long and costly integration projects.
The drivers’ business interruption product launch was successful, both technically and commercially, achieving a five per cent penetration rate within six months. To date, more than 10,000 policies have been sold to drivers through the ridesharing app. The run cost for the insurer is significantly lower, compared to that of a legacy solution because the Socotra platform is not only built to accelerate product development and improve customer experiences, but also to reduce ongoing costs.
This article was published in The Insurtech Magazine Issue 09, Page 28-29
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