New Product Concepts
To meet market demand for relevant products, insurance companies often develop specialized products to expand into new distribution channels. In determining a product design, Chadick suggests considering external factors.
It is important to analyze economic trends, competitor behavior, customer expectations, and regulatory changes when developing successful products. Researching a competitor’s product design can offer valuable insights.
Cabe suggests that in addition to conducting your own research, you can also utilize digital resources. Most of this information is publicly available since insurers are required to disclose certain information to their state department of insurance.
The number of product reporting requirements in states is increasing. Insurers can obtain information from Google or from a state DOI website to facilitate their decision-making process.
Set Claim Reserves
Insurers use statistical modeling to predict certain outcomes, including how much a claim will cost. Each action health block has a claim reserve, and the insurer reports those numbers quarterly for all their policies.
As an actuary, Cabe emphasizes that insurers use statistics to predict outcomes such as future claim payout amounts. Furthermore, insurance rates are determined through rate making and equitable rating plans are developed.
It’s rare, but if we can’t find a comparable product on the market for a new product, then we have to stick our finger in the air. It does not happen often. But when it does, we earn our reputation as conservative.
For managing product development and risks, insurers have many resources at their disposal including actuaries. They provide their expertise to insurance companies, reinsurance companies, actuarial consultancies, banks, regulatory agencies, rating agencies, and government agencies.
Be sure to tune into next month’s episode as we continue our discussions with Morgan White Group CEO David White and COO Rick Eaton as they discuss strategies for growing a business.
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