Introducing new insurance products can be a challenging journey, requiring careful planning, a thorough understanding of market needs, and effective execution. A recent white paper published by Akur8, titled From Idea to Market: A Comprehensive Guide to Introducing New Insurance Products, offers valuable insights into how InsurTechs and insurers can streamline this process.
The white paper explores the key stages of insurance product development, beginning with identifying customer demands and market trends.
For insurance firms, the product development phase is split into four key sections: pre-launch, launch, emerging trends, and maturing stage.
Each section represents a distinct phase in the lifecycle of an insurance product, from initial strategy and pricing to data-driven refinements and optimisation as the product matures.
The pre-launch stage focuses on strategic planning, where insurers define pricing and underwriting strategies, using external data to compensate for the lack of internal metrics.
The launch period prioritises real-time monitoring, with early adjustments based on market feedback and A/B testing.
During the emerging trends phase, initial claims data help refine pricing, and in the maturing stage, accumulated data enables advanced segmentation and traditional pricing methods. Akur8’s tools streamline and optimise these processes for insurers.
Building market price models
Insurers construct market price models through a three-step process involving segmentation, calibration, and competitive analysis.
Segmentation categorises risks, identifying factors that justify higher or lower pricing. This stage often uses insights from competitor pricing or historical data to evaluate risk across customer groups.
Calibration then determines baseline pricing, aiming to balance business growth with profitability. It incorporates claims costs, operational expenses, and discount plans, ensuring robust assumptions are validated through stress testing.
Lastly, competitive analysis benchmarks pricing against market trends, refining strategies to identify underpriced risks and maintain alignment with the insurer’s strategic goals.
How to succeed following launch
The launch phase of an insurance product is critical for refining strategies through real-time data collection and analysis. Unlike established insurers, new entrants can adapt without concerns over renewals.
Early feedback is used to fine-tune pricing and offerings, while conversion monitoring helps identify potential issues, such as underpricing in specific segments.
Adjustments are made cautiously, leveraging credibility-based methods like Lasso Credibility to ensure data validity. A/B testing further enhances strategy, allowing insurers to experiment with pricing, messaging, and features, provided regulations and channels permit. This iterative approach ensures a dynamic and responsive launch process.
Launching and pricing new insurance products is a complex process, requiring careful planning, data analysis, and continuous refinement.
Insurers must rely on strategic approaches like segmentation, competitive analysis, and iterative testing to develop competitive offerings, even without extensive internal data.
Akur8’s advanced pricing software streamlines this journey by providing the tools needed for effective data integration, robust pricing models, and real-time adjustments.
With its credibility-based methodologies, Akur8 empowers insurers to make data-driven decisions, ensuring the pricing models remain stable and adaptive in a dynamic market environment.
Akur8’s suite of modules offers powerful tools for insurers navigating the complexities of pricing and product development.
The Risk Module helps reverse-engineer market prices and build robust peril-level models, enabling insurers to adjust pricing structures based on emerging claims data.
The Rate Module allows for forecasting, stress-testing, and simulating the impact of adjustments, ensuring informed pricing decisions.
Additionally, the Demand Module enables insurers to create demand models from small datasets and assess price elasticity. Through A/B testing and incremental adjustments, Akur8 empowers insurers to refine strategies and improve model segmentation in real time.
Download the full white paper from Akur8 here.
