Product Innovation a Must for Insurers

CHICAGO -- Technology, trust and communication are three important components that will help companies successfully innovate in the coming years, a panel said Monday during the Insured Retirement Institute's marketing conference.

The session focused on the major disruptions to the industry -- from the Department of Labor fiduciary rule to technology and the graying of the advisor force, among others. Those inevitable changes, and others, will place immense pressure on marketing and product development teams to be creative, said Mike Hart, senior vice president and managing director of insurance services for AllianceBernstein.

"There's the convergence of many things that has resulted in the contraction of the (variable annuity) market in a very material way," Hart said.

He cited the speech Steve Jobs gave to employees when he took over Apple in 1997. At the time, a lot of tech companies were getting leaner and meaner. Despite trading at below its market value, Apple would do the opposite, Jobs said. He challenged Apple's employees to "innovate its way out" of trouble, Hart recalled.

Research is a big key for the insurance industry to do the same, the panel agreed. Different company teams must learn to share information, and be receptive to outside research, said Mike Treske, an executive vice president with AIG Financial Distributors.

"We make more intelligent decisions around design because we get more research," he explained. "We have better information that comes from our partners in the broker/dealer community."

The result is more intelligence that goes into the product design, he added. Support for innovation must come from the top down, the panel agreed, with Treske pushing back on the idea. Pledging such support is easy to say, he pointed out, but the proof is in the actions, especially the budget.

"Innovation is everyone's responsibility," said Christine Tucker, vice president of marketing for the retirement solutions division at Pacific Life Insurance. That means getting out and traveling with your wholesalers. Travel with people outside the industry, she said.

"You can't have all the answers," she said. "The world is changing so quickly and we do want to be relevant."

Sometimes, you have to have an open mind when working with other companies, said Jon Klestinski, annuity product leader with Edward Jones. A few years ago, Pacific Life brought an idea for a fixed indexed annuity to Edward Jones, but the latter company doesn't sell FIAs, Klestinski explained.

Instead of dismissing the overture, Edward Jones countered by suggesting a similar product without the indexing. The ensuing product took off with clients.

"We've seen strong growth in that product line," Klestinski said.

Technology will continue to assist innovation and change product development, the panel agreed. Treske recalled starting out with a large mobile phone attached to his car.

"We believe we should be much more efficient in sales" thanks to technology tools, he said. "These are just tools to help you tell your story better."

Social media is also a big tool to help companies with brand awareness, Klestinski added.

Then there's the DOL rule. The panel agreed that the fiduciary standard might be here to stay. Treske said it offers the industry a chance to convince people they need guaranteed income in their retirement portfolios.

"That's a great opportunity for us," he said. "I believe that people are going to find religion around the idea of having guaranteed income."

InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected].

© Entire contents copyright 2017 by InsuranceNewsNet.com Inc. All rights reserved. No part of this article may be reprinted without the expressed written consent from InsuranceNewsNet.com.