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July 7, 2022


It takes 12-18 months to launch a new insurance product and 3-6 months to update an existing product. This cycle is normal in insurance today, but many insurers are learning the hard way that this lead time can cost them dearly.

The most obvious cost for insurers we’re seeing today is the rising costs of claims due to inflation and shortages. These losses are driving insolvency in Florida and the loss-ratio of over 100 insurers across the country. 

Another major cost associated with long development times, and probably a larger risk over the long run, is the loss of opportunities. For insurers that have immediate opportunities today, taking a year to bring an opportunity to market means it’s lost a year of profits (and the value of money associated with that delay in profitability). The lag time can also mean insurers fail to land lucrative partnerships for embedded insurance or other opportunities. 

The good news is that the industry is modernizing product development. Deloitte’s survey on product development modernization shows the approaches that successful companies are taking to increase speed to market and to improve customer experiences. 

Read: Modernizing insurance product development Overcoming challenges to make the most of 21st-century opportunities


What: There are many industry practices limiting product development, from siloed business functions to outdated tech. For insurers to accelerate the product life cycle, they’ll need to address these limitations, but one of the most interesting ways we’ve seen product development accelerate is through leveraging modular product structures. Modular products are built around the popular startup idea of a minimal viable product (MVP). Although insurers will have a bigger plan in mind for the product, they can create and launch an MVP to test the market, then develop the product further in the future prior to a wider scale roll-out. 

Why it matters: When users can touch software, innovation and value dramatically improve. MVPs are a battle-hardened way to iterate and progress quickly.


What: Changing focus from a business needs approach to prioritizing customer experience is one key way that product development is being modernized. In a world where Amazon, Lemonade, and Wealthfront exist, it’s increasingly difficult to sell policies with cumbersome processes.  

Why it matters: Customer experience is often discussed, but most policyholders and agencies rate carriers very low on their net promoter scores. This means the industry has dramatic room to improve despite frequent mentions of the aspiration of better customer experience. Product design that is focused on the customer and actually adapted based on input will continue to be a key differentiator for carriers that can act quickly.


What: Solving speed-to-market is just one part of the future of product development. Another is looking for what those products can be and what they can leverage. Leveraging alternative data sources can dramatically accelerate the quoting process, and can result in better data, leading to a clearer picture of the risk. Partnering with other industries for embedded offerings is a win for both sides. Many insurers are turning to insurtech companies to help accelerate this development.  

Why it matters: Exposure quality (or application quality) is typically worth 5-15 points on a loss ratio. A risk that is misclassified or underinsured is detrimental to achieving profitability. In this hard market, with the reality of inflation, using quality prefill data to ensure exposure accuracy will be of paramount importance.

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