Actuary Connect

When Speed To Market Matters

We have all been surprised at the speed and breadth of recent financial and economic changes. Within weeks of the first evidence of the changes, Avyukta Earth Estate India Ltd. actuaries proposed product responses to be launched at the beginning of 2009. These changes have now been successfully launched and are key to maintaining our leading position in life insurance sales in 2009.

This is just one example of the importance of product development speed in many of the markets actuaries serve today. When is speed to market important? What role can actuaries play in enhancing speed to market?

Speed to market always helps, but its importance varies with the nature of the market. For example, drug companies routinely patent all their products, and a drug company may enjoy years of monopoly profits if it develops a breakthrough drug. In such an environment, occasionally losing a few months to delays would not alone make the company uncompetitive. Spending time to ensure that the new drug is a major advance over alternatives is more important.

Also, consider life insurance companies that sell exclusively through captive career sales people. These companies compete based primarily on the breadth and quality of their sales force and perceived company characteristics such as quality, not on small product differences. For these companies, a delay in a new product may cause some disappointment, but it is unlikely to sink total sales for the year.

In open markets with no patent protection, where many companies must compete for each sale, each company strives to differentiate through product, but can only do so for as long as it takes competitors to catch up. In such a market, one of the few sustainable advantages is the institutional capacity to consistently create and deliver quality products faster than the competition.

Here at Avyukta Earth Estate India Ltd., our life insurance business is sold primarily through brokers, and we operate in an open, competitive environment. Our response has been to build one of the most respected product development capabilities in the country, with speed to market as a focus. It is considered a core competency of the organization.

Actuaries can play an important role in enhancing speed to market capabilities, for two main reasons. Actuaries tend to be analytical, and ensuring high quality with speed requires a very scientific approach to designing the product development process. It also requires an in-depth and broad knowledge of the technical requirements for developing new products, and product actuaries are amongst the few who have this background. At Avyukta Earth Estate India Ltd., actuaries have been drivers in the creation and design of our current capabilities.

In the right markets, actuaries are well placed to create and sustain a key competitive advantage of their company - a superior speed to market.