What Does It Take To Be On The Cutting Edge In Life Insurance?
The life insurance industry is no different from any other industry that manufactures products for an end-customer in that it has frequent leading edge innovators, occasional leading edge innovators, quick followers, slow followers, and non-followers.
However, the insurance industry is unique, compared to most other industries, with respect to the speed competitors apply to catch up to an innovative product concept.
Why is this so? It would be an oversimplification to say all cutting-edge manufacturers rely on independent distribution channels (where product uniqueness can attract new distribution outlets–and retrain existing ones–to the innovator). After all, some leading-edge insurers do distribute through captive/proprietary distribution. However, those in the latter group tend to be fewer in number.
So, then, just what are the characteristics of life insurers in the leading-edge group? What makes them tick? Heres my assessment:
They have a healthy risk profile. Such manufacturers are willing to take the risk that a new idea will not succeed, for the potential payoff of a highly energizing product initiative. Nearly all have been forced to bounce back from new product initiatives that have failed. But while no life insurer wants to experience a "New Coke" product launch, the strong ones can (and do) learn from mistakes and move forward.
They have a product "value-added" approach. Many great theoretical product ideas should have stayed in the Home Office because there was no solid value proposition behind the innovation. The strong, creative developers look for designs that solve a real policyholder or sales rep problem, be it enhanced liquidity, retirement income, taxes, commissions, etc. Such insurers do not develop "solutions looking for problems."
