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Leveraging Automation and Technology to Solve Key Challenges in Insurance Product Development

Leveraging Automation and Technology to Solve Key Challenges in Insurance Product Development

Several current P&C insurance trends are fueling demand for new and updated insurance products, especially because of advances in digitization. Insurance innovation, competition, new market entrants, and changing consumer preferences are some additional drivers behind new insurance product demand. Everything from customer personalization to new and different data sources is inspiring development or modification to existing insurance products – all at a faster pace.

Usage-based auto insurance and behavioral-based rewards are examples of newer capabilities, possible due to digitization, in turn, increasing consumer value and adoption,  Embedded insurance, although not an entirely new concept, is trending because of digital ease and convenient availability by placing an insurance offering right at the point of purchase. Travel insurance with digital airline bookings, pet insurance with a banking app, auto insurance bundled in with auto financing, and similarly commercial insurance plus commercial vehicle purchase. Digital ease and access are making it easier to combine these offerings.  Things become even more interesting when a car manufacturer and insurer share telematics data and offer a bundled safe driving program to unlock discounts. This is already happening as evidenced by companies like Tesla, Ford, GM, and others.

Embedded insurance fits a number of scenarios geared toward making commerce more streamlined and perhaps more logical as one combined experience and is forecast to drive significant new revenue as well. The concept also bodes well for capturing and maintaining consumers’ attention very much in the moment. Just consider having to search and price various travel insurance options separately and after spending time finding and booking travel where it can be too easy to forego insurance coverage once the presence of mind has escaped.  Rental car companies have excelled in promoting additional insurance and taking the extra steps of having drivers decline coverage as part of the contract – right at the counter or online purchase.

Related Reading: Simplify Complex Insurance Product Development with Jama Connect®

What the Insurance Product Experts Say

We recently spoke with several insurance product and regulatory compliance executives and gathered their insights about the state of product development. Insurance product development is often described as slow and expensive, adding to carriers’ existing challenges to automate and reduce expense ratios. Thus, each new product competes for other internal resources and budgets. Development cycles can take several months or even longer from start to launch. When probing a bit more, insurance product owners cite IT backlogs, cost barriers, and slowness around decision making and approvals as some of the common causes. A key component of product development involves approvals through traditional hierarchies which flow from analyst groups to management and from middle managers to executives. Either way, the process is described as a gathering of specialists and individual organizations collaborating together over a long period of time. These steps tend to occur in meetings and through emails which can elongate timelines and be difficult to organize and later trace.

The experts say that such barriers result in a measured volume and cadence of new product launches in any given year. In fact, some product modifications may be abandoned entirely as the backlog for IT projects is recognized insurmountable.  One such insurance executive described the completion of a new product as highly dependent upon select, internal subject matter experts with deep institutional knowledge. And, it frequently takes “sheer leadership heroics” to push the process to the finish line.  Admittedly, insurance product development is complex, especially when it comes to meeting various state rules and regulations.

People, Process & Technology

Equipping teams with the right tools is one of the three essential, People, Process & Technology legs needed to enable effective business management. This framework has been widely accepted for decades and is even more relevant today.  Building the correct set of requirements is the cornerstone of modern product development and this is where insurance carriers’ people teams strive to share, inform and collaborate whether in a waterfall, agile, or a hybrid project environment. Nearly every core functional area has a role to play; from legal research to marketing, from actuary and pricing to distribution.  Insurance carrier functional areas are specialized and distinct, so the term, “siloed” is fitting as both a strength and barrier when it comes to coordinating people’s expertise for requirements creation.  Invariably, much of the process is manual, unfolding through a series of meetings, email inquiries, and approvals and perhaps tracked on spreadsheets and shared drives, thus can be error-prone, lack updates, and most certainly difficult to trace.

Tools and adoption of technology for requirements management are lagging, both in terms of today’s speed-to-market pace and when comparing other complex industries. Yet insurance carriers are continuously investing to catch up. Sophisticated policy admin platforms are needed to maintain all aspects of policy management and many carriers have embarked or may have recently completed legacy system transformational efforts, and for good reasons. Here are just a few:

  • New products may depend on third-party data ingestion and accessibility needs to be cost-effective and has been a barrier since legacy systems don’t have efficient connection points to these outside sources.
  • When a new underwriting data source is presented, the cost-benefit analysis doesn’t support investment costs inherent in legacy systems.
  • Legacy systems have also created difficulty in understanding and addressing defects that have a direct impact to expense due to the time needed to trace, investigate and apply a fix, not to mention business, regulatory, and brand reputation risks.

Insurance carriers are certainly investing and working with a growing number of applications and are constantly managing long IT project list backlogs. So, playing catch-up is an accurate description when it comes to deploying new tools.

Related Reading: The Emergence of Technology for Insurance Product Development

Team Collaboration is a Must

During our research discussions with insurance product development experts, we heard a lot about the level of reliance on key people and teamwork.  Some of the common themes expressed by leaders revealed:

  • In lieu of solid processes and technology, much work is manual, and success is delivered due to sheer, individual “heroics”.
  • Senior leadership tends to reward these heroics so there may be limited motivation to change. Long development cycles are somewhat accepted.
  • Solid change management is a major dependency to ensure people are embracing new technologies – systems are only as good as the people that use them so advocacy at a senior level is imperative
  • Challenges exist due to the many moving parts and functional areas involved in product development – it’s complicated!
  • Transparency/Traceability of changes. What is the change and associated impacts, who is making the change, why is the change being made, how is the change being tested and implemented are key questions.
  • There are competing priorities within functional areas that can impede collaboration.



As technology catches up to make product development more efficient, collaboration and teamwork remain vital mainstays. Organizations are beginning to activate return-to-office plans which involve several flexible hybrid options so new forms of teamwork and collaboration should be in the forefront now more than ever.

The industry has also tackled legacy system transformations noting that few are completed, many are deploying and some have avoided the undertaking altogether because of massive costs and time factors. While there are constant new technology horizons yet to achieve, such as cloud migration, deployment of tools, and user capability upgrades are deserving areas of attention when it comes to striking the right mix of People, Process & Technology. Product development platforms are likely to be one of those priorities for insurers seeking to keep pace with product development and the latest technology.

Insurance Product Development

This blog is part of a series written by Alan Demers, founder of InsurTech Consulting and author of Insurance Thought Leadership. For part one of this series, visit: The Top Challenges of Property & Casualty Insurance Product Development. Stay tuned in the coming months for more.  

The Emergence of Technology for Insurance Product Development

It seems that the volume and variety of analysis describing P&C Insurance industry trends and predictions have been on the rise over the last few years which happens to coincide with the insurtech movement itself. In this, new meets old paradigm there is much discussion about adoption rates, whether by consumers or insurance carriers themselves, privacy concerns, legacy systems and a host of other barriers. There’s an even greater volume of excitement for all the amazing possibilities to drive revenue, improve bottom-line results and modernize customer experiences. Terms like transformational, industry disruption, and reimagine (everything) were hardly, if ever used, to describe insurance just a few years ago.

Over the past 5 years, insurtech investment has soared with consecutive record-setting levels each year. According to Forrester Research, Inc., over $15b was invested through Q3 in 2021 surpassing global insurtech investments for all of 2020. The gravity of capital infusion has inspired a wide range of technology, new insurance models, and more digital deployment, in turn, raising consumer and business owner expectations. So, it only makes sense that the volume of predictions, speculation on winners and losers and everything insurance news-related, is simply amplified. Well, for 2022 that is changing too with greater attention on climate change, cyber risks, and emerging embedded insurance models just to name a few highly talked about trends. And many of these trends call for new insurance products which are still mostly developed and deployed by each individual insurance carrier, whether with external provider support or not.

RELATED POST: Farm Bureau Insurance Selects Jama Connect® to Reduce Time to Market

Popular 2022 Predictions:

Among the numerous insurance industry trends and predictions for 2022, some of the more popular and noteworthy themes include:

  • Cyber exposure, demand for protection, products and services
  • Climate change risks and rising insurance costs
  • Changing definition of insurers with the likes of Amazon, Tesla, and Toyota selling insurance
  • Embedded insurance models by combining insurance at point-of-purchase with other products
  • Parametric insurance for events, travel and the first layer of protection
  • Digital adoption and demand for new products
  • Usage-based, sensor technology and reward-for-behavior offerings

There are several other trends extending beyond 2022 that are expected to impact how insurance is bought and sold, serviced, experienced and priced for years ahead. Artificial intelligence is already being deployed, however early on, for many of the more complex use cases. Meanwhile, image analytics are being widely leveraged throughout underwriting and claims, reshaping the customer journey processes with great success. Blockchain continues to be cited as having lots of future promises and autonomous car features are making driving safer and increasing the cost of repairs simultaneously. A common question is, “which emerging technology(s) and startup(s) are most exciting?” The answers range from pragmatic to futuristic, like completely automated and instant underwriting might be someday.

Editor’s Note: In our 2022 Industry Predictions Series, we asked Alan Demers, to weigh in on product and systems development trends he’s anticipating for the insurance industry in 2022 and beyond. Visit 2022 Insurance Predictions Banning Credit Scores Automation and A Highly Competitive Marketplace to read his full insights!

Demand for new products

A common denominator for each of these trends, especially among incumbent insurance carriers, is mounting pressures to launch new and/or modify existing insurance products at a much faster pace. Historically, insurance product development has been relatively slow and methodical, where it can take a carrier months or even longer from start to launch. Thus, speed-to-market remains a top challenge. Complex and individual state regulations, sophisticated pricing segmentation models and nuanced policy language are just a few reasons that explain why insurance product development is so difficult. Add in insurance carrier IT backlogs and competing programming priorities and it all begins to explain why new product development takes such time and effort. Yet, the pace of new product launch is not keeping up with the tempo of new market entrants and changing consumer preferences. Those companies that can launch faster and more efficiently will have a clear advantage moving forward.

RELATED POST: Simplify Complex Insurance Product Development with Jama Connect®

Legacy systems and ways of working

In recent years, most of the large carriers have upgraded or are just completing retirement of core systems, replacing far outdated legacy insurance policy administrative, claims and billing systems for new and more adaptable platforms. Such transformations are extremely expensive, in the tens of millions of dollars, and can take several years to complete – and that’s just to contemporize 30+-year-old technology and does not contemplate cloud migration and other investments. The upsides of modernizing core systems are numerous, including ease to integrate new technology which enables insurers to partner with additional solution providers, startups and others relevant to modernizing agendas. Consider leveraging real-time data to better price and manage risk, for example. This can hardly be done with legacy systems and without integration but comes to life with a modernized platform and numerous data integrations from various sources and providers. Much like everything else these days, businesses and consumers demand things to be instantaneous and real-time or insurers run the risk of missing on new business.

In reality, the insurance industry has evolved at a steady pace from the 1980’s conversion from paper to desktop computing, in the 1990’s moving from highly regional to centralized service centers, 2000’s mobility and more recently toward digital and automated. Many in the industry say that more changes have occurred in the last 5 years than the last 20 combined and that is an accurate statement.

When factoring industry trends – insurtech, changing consumer demands, emerging risks and insurer investments, and all other related dynamics – it’s easy to see how new product and product differentiation will play an important role going forward. Partnership insurance models – such as OE car manufacturers paired with an insurer leveraging data sharing, usage-based insurance, and possibly with financing and even connected car payment options – call for product and pricing features much different from traditional insurance policies. Sensor data to predict, avoid, and detect losses will reshape insurance from a reimbursement model to insurance-as-service and likewise will influence new and different insurance products.

Now that the insurance industry is tackling legacy systems, it’s opportune to address legacy ways of working. The seemingly never-ending aftermath of Covid 19’s impact to working environments is still very much unsettled. Despite employee survey results suggesting most office workers prefer work from home for some or all of their work, insurance executives are challenged with measuring productivity and uncertain about sustaining team collaboration going forward. Team collaboration, especially given insurance carriers’ highly specialized and siloed constructs, is imperative when it comes to developing new products. In fact, the speed and efficiency of development cycles is a direct outcome of how well departments and people collaborate, move and approve work, make decisions and move the ball forward. Yet, Excel spreadsheets, email, and meetings are cited as the main ways of working when it comes to product development. So, there is much room for new tools and forward-thinking team collaboration ahead for the insurance industry.

No matter how 2022 insurance industry predictions pan out, it will be another exciting year for insurtech adoption, new tools, and new products alike.

In many ways, 2021 was a continuation of the changes brought about in 2020, a year that’s been described as “unprecedented” and “unparalleled.” In a unique way, 2021 has offered us an idea of evolving innovations and technology on the horizon for teams across industries. These changing conditions will present a variety of new landscapes and will offer unique challenges, opportunities, and more than likely, many surprises.

As we enter a new year of further changes, Jama Software asked select thought leaders – both internal and external – across various industries for the trends and events they foresee unfolding over the next year and beyond.

In the final part of our five-part series, we ask Alan Demers, President of InsurTech Consulting, LLC, to weigh in on product and systems development trends he’s anticipating for the insurance industry in 2022 and beyond.

Read our other 2022 Industry Predictions here: Part One – Engineering Predictions, Part Two – Medical Device Predictions, Part Three – Automotive Predictions, and Part Four – Aerospace & Defense Predictions.  

Insurance Predictions 

Design Trends

Q: What are the biggest trends you’re seeing in the insurance industry right now?

Alan Demers:

There are several noteworthy trends to consider and I think it may be helpful to divide them into insurtech related and general insurance ecosystem categories. The sustained emergence of insurtech is driving and inspiring growth in a variety of concepts like telematics usage-based auto insurance, use of geo-spatial, 3-D modeling and social data for underwriting and automation and digitalization of insurance are a few trends already underway. Artifical intelligence for predictive uses and conversational AI for services are gaining momentum while image analytics for virtual inspections has really taken off and is being broadly adopted by insurers and their customers. The ambition for insurers to automate and lower costs was met with an obvious surge in touch-free services because of Covid 19 which only added fuel to a burning fire. These are just a few examples among dozens of insurtech themes with countless solution providers joining the ranks each quarter, whether a startup or incumbent.

Overall, property and casualty insurance (P&C) ecosystem trends include; mergers and acquisition (M&A) activity among independent agency distribution and growth in direct channel sales among auto, home and small business. Post-pandemic return to miles driven and changing driver behaviors resulting in higher frequency of accidents and automobile technology, inflation and supply chain influences raising severity or cost of repairs. Insurance carrier legacy system transformational and cloud migration efforts are broadening. Cyber and climate /weather exposures, and social inflation (e.g., jury awards) are among the top trends as well.

Q: How will they impact insurance product, systems, and software development?

Alan Demers: Many of these trends are creating new and different product demand for changing exposures, like cyber risks, or to address competition and differentiation agendas. Consumer demand for ease of doing business will make concepts like embedded insurance models more popular, especially at point of purchase. Similarly, car manufacturer and insurance carrier partnerships will take usage-based-insurance, connected car features including on-board payments and services to a new level.

With respect to system development, insurer’s legacy core system transformations are separating carriers. Those carriers which have completed a policy administrative system transformation may be better positioned to accelerate product development. For example, taking advantage of new data feeds, API’s and partnership integrations that were previously on the back burner. Those carriers have not yet or are just beginning to address their core systems will be playing catch up because of the enormous costs, internal resources, and time required.

Overall competing priorities and deciding which areas to invest (core systems, insurtech development, new products, or automation choices) will continue to challenge insurers in terms of cost and deployment of finite resource availability.

Biggest Challenges

Q: What are some of the biggest challenges you think the Insurance market will be working to overcome in 2022?

Alan Demers: I think it is helpful to look at current year challenges understanding that the insurance industry tends to take the long view, both retrospectively and projecting forward. So far in 2022, talent competition is intensifying on top of managing remote and hybrid work teams. Given the industry is so traditionally people centric, sustaining employee productivity and collaboration will be put to the test as “return to the office” elongates and evolves.

In addition to changing workforces, cost reduction or expense ratio pressures because of the highly competitive marketplace will remain a priority. This means more automation and other areas of cost cutting focus. Profitability, in select areas like commercial auto and trucking lines which have been problematic over the last several years.  Weather related risks and recent increasing reinsurance costs cause insurers to balance higher premiums and policyholder retention during a time when catastrophic events are increasing. Prioritizing exploration of new automation and insurtech investments while making gains through implementation and scaling other concepts already underway will remain a hurdle in 2022.

RELATED POST: The Top Challenges of Property Casualty Insurance Product Development


Q: What changing regulatory guidelines do you anticipate having an impact on companies in 2022?

Alan Demers: Individual state regulations are constantly changing and updating in an already complex legal environment. However, consumer privacy and info-security will continue to be top areas of regulatory focus as insurers adopt new technology and partner with more startups. Again, we should expect more of the same in an already highly regulated industry which feeds into creating and sustaining a risk averse climate which can impede insurtech progress.

Tool Innovation

Q; From an insurance market toolset perspective, what are some of the processes you think forward-thinking firms will be working to leverage or incorporate into their process and why?

Alan Demers: The “why” portion is fairly straightforward to answer and is related to the highly competitive insurance market itself. Specifically, tools that will help automate and thus lower operating costs, differentiate to retain or grow customers and capabilities which may avoid or reduce losses are all promising motivators.

Insurers are working to advance self-service tools and greater digitization of process maturity to increase adoption. This has come a long way with much more room to improve, particularly when insurance services are compared to other industries like e-commerce or banking in terms of both adoption and satisfaction. Application of artificial intelligence (AI) for conversational, predictive, and computer vision applications are still early on and insurers are making investments and striving to apply them effectively. Doing so, will make insurance personalization, better pricing accuracy and also speed up, quote, bind and underwriting steps benefiting consumers while gaining efficiency in tandem.

RELATED POST: Customer Story: Farm Bureau Insurance Selects Jama Connect to Reduce Time-To-Market


Q: What do you think will remain the same in your industry throughout 2022?

Alan Demers: In auto and homeowner lines the fight for market share gain within the top 10, especially the top five will remain. Expect to see more insurtech advancement due to high venture capital investment levels and as startups move through maturity cycles or get snatched up by insurers. The insurance ecosystem and large solution provider market places are expanding and will add partners making it somewhat easier insurer access. Overall, expect to see a relatively conservative, slow moving industry despite moving quicker than ever before. Like it or not, the US insurance industry is mainly a 100+ year conservative space.

Q: What do you predict for regulation in the Insurance market in 2022?

Alan Demers: One of the more talked about regulatory threats is the use of credit scoring which could be banned beyond states like CA, and recently in WA.  Credit scoring is a heavily relied upon rating variable and predictive of future losses, despite growing concerns about fairness. Elimination of credit scoring could further pressure pricing and segmentation accuracy as carriers have come to rely upon credit scoring models for many years. Some carriers are better positioned with other rating variables and telematics and driver behavior programs.  It is possible that some insurers could involuntarily reduce credit scoring and replace with driver scoring instead.

Q: Will those trends still be prevalent 5 years from now? 10 years?

Alan Demers: The way P&C insurance has changed since 2015 makes the next 5-10 years exciting to think about. For example, autonomous/connected/electric vehicles will be more advanced and prevalent in market and will further shape liability, insurable risks and insurance products themselves. Many of the other trends such as automation efforts, AI solutions, sensor technology for loss avoidance and detection and cyber crime exposures are likely to be in the insurance forefront in 2027-2032.

Thanks for tuning into our 2022 Predictions Series!

To see some of the incredible products, software, and systems our customers are building with Jama Connect, visit our CUSTOMER STORIES PAGE.


This post is part of a series written by Alan Demers, founder of InsurTech Consulting and author of Insurance Thought Leadership. Stay tuned in the coming months for more.  

The Top Challenges of Property & Casualty Insurance Product Development   

Today’s P&C Insurance landscape is both vibrant and facing major disruptive change.  With the top 10 carriers commanding well over 70% of the personal lines, auto and home insurance market and hundreds of additional carriers making up the balance, things were already highly competitive.  Growth in digital channels has altered insurance shopping and buying behaviors adding to the commoditization trend of insurance products, making it easier than ever to switch carriers, especially for auto insurance. Telematics for auto, IoT, and smart home technologies are engaging consumers differently and offer the benefit of avoiding and mitigating losses as the industry shifts towards risk prevention from traditional sole protection and indemnification models. These are just a few noteworthy trends among a host of automation efforts, new insurance models and products – all happening throughout the recent insurtech movement. 

Commercial lines continue to become more vertically specialized, particularly in small business lines. New insurtech entrants tend to focus on disrupting select product lines where larger, multiline established carriers may underserve certain business owners and markets. 

The P&C industry is moving through a broad range of innovation with over $15 billion during 2021 in venture capital investment and scores of outside influences converging on this 100+ year industry like never before. Meanwhile, established carriers are pushing through multi-year legacy system transformations, heavily investing in innovation while striving to modernize core processes which have historically been manual and people centric. 

Each of these variables are pressuring insurers to lower operating costs while automating and launching new products to differentiate and compete in protecting market share with only a handful of carriers capable of gaining share. New products and revisions to existing insurance products demand calls for rapid speed to market vs. traditional launch times that typically span up to a year or longer. The insurance product development process is highly dependent on effective requirements management and constant cross-functional team collaboration, which is vital to avoid costly delays, defects, and premium refunding due to undetected errors. 

RELATED POST: A Guide to Requirements Elicitation for Product Teams

Challenging Remote Workforce Barriers

Insurers are highly people driven organizations and are well-known for having siloed organizations given the pervasive scale and specialized work teams. When it comes to developing and launching a new insurance product – it truly takes a village. Stakeholders and contributors span from several highly specialized areas, including actuarial, pricing, underwriting, legal, claims, marketing and distribution to name a few. Thus, collaboration does not always come naturally nor easily.  Associate engagement and company culture are top priorities and having the right tools and technology can make a big difference given that much of insurance product development relies on, legal research, specialized rate making expertise, approvals and decisions often made through emails and organized via spreadsheet tracking.  Some use collaboration platforms and shared drives, which can be helpful but lack versioning, baselining, uniformity and most importantly change and impact analysis due to ineffective live traceability.   

While carriers are adopting automation, much of the attention is on gaining new customers, services, distribution, and overall efficiency gain. Digitization, self-services, and artificial intelligence for predictive analytics are a few examples. New data sources, such as geospatial and personalized data and image analytics are being leveraged from underwriting to claims management. Automation of internal processes such as pricing (ratemaking) and product development have seen lesser insurtech funding and focus and tend to be less obvious or viewed as more complicated areas to solve in comparison. Leading insurance companies have recognized these processes must receive greater attention to drive competitiveness and increased speed to market.

Speed to market and quickness to revise and modify products have many obvious benefits in today’s highly competitive P&C insurance marketplace.  Most would agree that the typical insurance policy itself is quite complicated. A look behind the scenes at the process of pricing, rate making and filings with respective state departments of insurance along with attendant policy administration and IT programming is where the real complications begin.  After all, insurance premiums are priced on an individualized basis by design. In other words, each consumer, or segment of customers more realistically, have differing risk profiles and thus different price points which can number in the thousands of different rates for a single product.  

RELATED POST: The Real Intent of Model-Based Systems Engineering (MBSE) – Keeping Up with Complexity

Industry Regulations

The US insurance industry is regulated on an individual state level through each respective department of insurance, responsible for approving products and regulating rates among other consumer protection focal areas. Additionally, each state has a bevy of insurance regulations, statutes and common laws and each insurer has differing marketing, regional considerations and so much more to balance when it comes to launching new products. With all of this in mind, it is easy to see how errors can be made or interpretations might differ, only to be discovered at a later time, which adds cost and increases regulatory scrutiny.  

 There is a lot to be said about doing things right the first time by being able to test, trace and apply impact analysis early and often. The consequences of product defects are most visible during so-called market conduct studies performed by departments of insurance which can result in penalties, fines, and premium refunds. Or, a carrier may self-discover a defect and proactively take measures. Either way, the amount of resources and efforts to identify root causes and deploy remediation measures are extremely costly and often harmful to the brand itself. Less visible scenarios can occur during product development cycles and simply result in time delays, re-work and fixes which account for the extra time to launch or altogether delay and avoid making revisions to existing products.  The stakes are high in terms of costs and missed opportunities. Insurers investing in tools and technologies to build insurance products better and more efficiently can enjoy a competitive advantage.