Gone are the days when a handful of insurance products could satisfy the insurance needs of many. In this world of hyper-customization and micro-segmentation, insurance companies are constantly looking for new ways to attract consumers—and this means the ability to design customized market and service products that appeal to these niches.
Herein, lies the challenge. How do insurance companies launch new products faster, cheaper, and better than anyone else when they are beset with legacy IT systems that, at worst, don’t support these products, and at best, need significant resources and time to do so? This is further compounded by the fact that despite well-thought strategies and best-laid plans, not all products will succeed. While some products are destined to reap rich reward for insurers, others will fail miserably and slowly be forgotten.
What is clear, however, is that both scenarios require insurance companies to be agile in supporting failed products that absorb valuable resources, as well as in scaling up operations quickly to support policy servicing. In some product launches, sales of actual policies exceed forecasts by 300%, offering little time to scale up operations.
What to look for when choosing a digital TPA
Given the economic and operational challenges associated with new product launches, insurance companies need to rely on partners to augment their capabilities. This is where a digital TPA can step in to provide a sophisticated technology platform that supports newer, feature-rich products and the necessary scale and size to support such strategic initiatives.
With the choice of digital TPA service providers on the rise, there are a number of features you should look for when choosing a digital TPA:
- Digital TPAs offer new product launch pads that combine the latest technology with deep operational expertise to launch new products within 6–9 months. The launch pad should be highly configurable, modular to support plug and play, and should support open integration. In addition, it should be able to quickly and efficiently introduce new products through digital and traditional channels, as well as support leading industry operational practices, from application intake and underwriting, to claims processing and customer support.
- Digital TPAs should have the capability to further hire, train and onboard operations’ resources that have deep operational expertise in their respective domains and are comfortable operating in a digital environment. This includes e-App, digital mailroom, and digital member interaction channels. For more on this topic, read: “How Digital TPAs Can Enhance Your Digital Customer Engagement.”
- Digital TPAs should have the agility and speed to respond to volumes of new applications and service requests, varying their operations’ staff accordingly. In some cases, a TPA service provider may be required to triple or quadruple their teams in a short space of time, whereas only need a bare-bones structure to support the engagement and meet SLAs in others. This requires a culture of knowledge management, cross-skills training, and diligent resource planning.
- Digital TPAs excel the most in the economics of new products. Not only can they get a product up and running in a short amount of time compared to most insurance companies, significantly reducing upfront investment, but they can also dramatically reduce steady-state cost. Insurance companies leverage a “pay-by-the-drink” model that puts the risk and onus on TPAs to vary their steady-state cost and run efficient operations. Clients pay per member per month (PMPM) fees that are a function of their active members (or policies) and tied to the success or failure of a product.
- Finally, digital TPAs should offer flexible engagement models that may necessitate the transition of successful, strategic products back in-house to an insurer. This requires a mindset change for most TPAs and requires a partnership approach. In essence, a digital TPA acts as an incubation cell for new products, enaging an insurance company to experiment with new product concepts and innovative distribution channels without fear of failure.
To summarize, digital TPAs enable insurers to launch new insurance products quickly and at a significantly lower cost, offering flexible engagement models that deliver the necessary risk protection.
Insurance companies need not be burdened alone in their quest for growth. They should reach out and engage digital TPAs through a carefully designed evaluation process that meets their specific requirements and helps them achieve genuine “no regret” product launches.
To find out more about how our IBAS solution can increase policyholder engagement and satisfaction, while reducing time-to-market for new product launches and lowering administration costs, contact: email@example.com
Click here to learn more about how Capgemini’s Integrated Business Administration Services (IBAS) provides an integrated technology and operations platform for Life and Health insurers in the North American market.
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