New Product Development and New Technologies: The Power of "How?"

Earlier this month, my colleague Monique Hesseling wrote about the power of asking the right questions in new product development. That practice is just as useful with respect to new technologies. As we have seen with social media and smartphones, what were once “emerging” technologies can become widely available and widely used in a very short period of time. Insurers have developed ways to use both of these technologies in new products and services, although plenty of untapped opportunity remains in both areas. But as new technologies continue to emerge, how do we, as an industry, continue to incorporate them into new or existing products and services?

The conversations about using new technology in insurance have typically centered on two questions: Why? and Why not? The Whys, as we shall call them, are reluctant to adopt new technologies because the status quo works (or works well enough). The Why Nots, on the other hand, jump at the opportunity to use new technologies because of their novelty and the desire to be among the early adopters of new technology, even when the benefits are not necessarily clear.

The problem with framing the conversation around adopting new technologies as a question of “why” or “why not” is that it focuses on personal beliefs and opinions. The best questions to ask about new technologies start with “how.”

How can insurers take the technologies around us, whether they be established, maturing, or emerging, and use them for real competitive advantage? How can we get the most out of their use, and how can we use them to improve the customer (and employee) experience? How can new technologies be applied to new or existing products to make them better and to differentiate our company?

This year’s SMA Innovation in Action Award winners gave us some good examples. For instance, John Hancock’s Vitality Program is using mobile technology, gamification, and wearable devices (a free Fitbit) to create a unique and highly interactive relationship between life insurer and policyholder. Wallflower Labs, Inc. is using the Internet of Things to provide brand-new preventative services to a specific population of homeowners policyholders: those with aging relatives or young or special needs children, who face increased risk of house fires from the unsupervised use of ranges and cooktops.

These award winners demonstrate just how much can be done toward creating new products and modifying existing ones through the creative use of maturing and emerging technologies. John Hancock, for example, models effective decision-making with regard to incorporating new technologies into existing products by offering their program members a free wearable device. Wearables can provide behavioral and physiological data that can be used to inform the calculation of life insurance premiums. The same wearables can provide policyholders with valuable feedback and the possibility of earning premium discounts. It’s a win-win for both the customer and the insurer.Both of these initiatives gather data on policyholder behavior (fitness activities and cooking patterns) that insurers can use to offer premium discounts and leverage to create increasingly personalized life and homeowners products. Haven Life Insurance Agency, LLC, has taken this thinking a step further by designing a term life product that uses big data and analytics to offer policies online with a 20-minute application process.

All insurers looking to incorporate new technologies into their product development should  invest in idea-generating processes that are focused on how a given technology can be deployed before deciding whether to pursue that technology. Insurers excel at calculating risks and benefits, after all. Once the potential uses of a specific technology have been determined, insurers can apply that expertise to performing sophisticated cost-benefit analysis on those options.

The Whys and the Why Nots will never agree on everything, but they can unite behind the question of How. That shifts the discussions around new technologies to evaluation and problem-solving rather than opinion and persuasion. Ask “How?” and reap the benefits.

This blog entry has been republished with permission from SMA.

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The opinions posted in this blog do not necessarily reflect those of Insurance Networking News or SourceMedia.