Digital Life Insurance
Product Design
Nkenge Blue, FSA, MAAAAugust 2, 2019
What (I Hope) You’ll Learn1) How the current state of the life insurance industry provides an opportunity for insurtech companies
2) Ways modern software development, specifically agile, drive innovation within insurtech
3) How actuaries manage to work, price, and design new products within an agile environment
Let’s Set the Scene
https://www.insurancebusinessmag.com/us/news/marine/one-in-four-insurance-agents-will-be-gone-by-2018-17943.aspx
Individual life insurance ownership is at a historical low, and the average age of an agent is 59 Years Old
Insurance is sold, not bought...
right?
1 in 4Agents will Retire in the
Next 18 Months
3-4 New Agents Needed to Replace Each
Let’s Set the SceneChanging consumer behavior continues to drive new entrants into markets across industries
https://www.imd.org/research-knowledge/articles/why-you-will-probably-live-longer-than-most-big-companies/
Shift Towards Digital and Self-Directed Buying Experiences
Average Lifespan of an S&P 500 Company
18(down from 61 in 1958)
Average Age of a Top Life Insurance Company
100
Why is it hard for new life insurers to
start?
https://www.businessinsider.com/insurtech-insurance-technology-report
What We Mean by Insurtech
Includes: Smartphone Apps, Consumer Activity Wearables, Claims Acceleration Tools, Individual Consumer Risk Development Systems, Online Policy Handling, Actuarial Innovation, and More!
Proliferation of new technology that can: drive growth, open new markets, and re-engage customers
AgileDescription:● Small, incremental builds● Iterative process focused on adaptability● Scope is variable, cost and time are fixed
Pros:● Rapidly develops working functionality● Adapts quickly as environment changes
Cons:● Highly dependent on customer interaction● Little documentation
Software Development Life Cycles (SDLC)
WaterfallDescription:● First SDLC model● Linear, sequential flow● Scope is fixed, cost and time are variable
Pros:● Simple and easy to understand● Strong documentation and control
Cons:● No working software until late in the
SDLC● Cannot accommodate changing
requirements
What is an MVP?
https://www.sportingnews.com/us/nba/news/michael-jordan-lebron-james-how-to-properly-approach-goat-debate/y9j3m6jeta331l78l9e4b0wb2
Traditional New Product DevelopmentA Waterfall Approach
BuildNeeds and
Market Forces
Final Product
ExhaustiveRequirements
Determine customer needs through advisor input and react to changing market.
Gather input from Legal, Actuarial, and IT to determine feasibility of project and necessary requirements.
Work to deliver finished, full-featured, marketready product.
0 to 3 months 3 to 6 months 6 to 12 months
DailyMeetings
6 to 12 months
Visionfor
Experience
Minimally Viable ProductUtilizing Agile
Product Backlog
Increment Backlog
Increment
2 week work block called a
“Sprint”
Work to deliver first increment of working software in 2 weeks.
Determine vision for customer and advisor experience through UX research.
Plan increments based on product backlog and priorities, which will evolve as you learn from prior increments.
Gather input from Legal, Actuarial, UX, Development, and Product to determine product backlog.
3 to 6 months 0 to 2 months
Learn. Repeat. Delivering further increments of software with enhancements
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Shivraj Singhhttps://dribbble.com/Expert-UI-Designer
Vision for Experience: Wireframes■ Log In
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Imagine we have built a tool that renders application questions. We can instantly get all applications questions on the internet, in front of our customers, in any order, with minimal configuration.
Great right?
Yes and no. Tools that render automatically also have constraints.Let’s talk about the difference between the two boxes on the right. What if your rendering tool only provides one type?
Software Automation Limits Innovation
An Actuary’s Role in Agile
How can an actuary...
1. Design2. Price3. File4. Obtain 50 state approval and,5. Implement
a new insurance product in one sprint?
An Actuary’s Role in Agile
How can an actuary...
3. File4. Obtain 50 state approval and,
a new insurance product in one sprint?
If you could do these 2, you’ve likely bought
out the regulators...
An Actuary’s Role in Agile
How can an actuary...
3. File4. Obtain 50 state approval and,
a new insurance product in one sprint?
If you could do these 2, you’ve likely bought
out the regulators...
...working in agile ishard…
Short Answer is...
Accounting Dependencies
...working in agile ishard…
Short Answer is...
DiscriminationIssues
RiskManagement
Product Filingsand Approvals
Agency Salesforce
Reserving Requirements
State Insurance Departments
Agency Salesforce
...working in agile ishard…
Short Answer is...
...but not impossible!
It’s All About Mindset and Environment Working in a true agile framework is difficult as an actuary, but working with an agile mindset is possible
The Actuary1. File EVERYTHING!
a. Helps prepare for changing environment
2. Start with MVPa. Don’t be everything for everyone
3. Data-driven, iterative approach to products
a. Fail fast (you will fail!)b. Learnc. Adapt
4. Remain flexible to consumer feedback
The Company1. Buy-in from other areas
a. IT, Legal, and Filing
2. Management’s openness to failure a. Not every product will be successful
3. Enterprise-wide ability to react quicklya. Modify products to adaptb. Scale back scopec. Pull products when necessary
Questions?