Speed To Market Strategy: Tailor
Product Filings To Each State
By Sandra Meltzer
In our fast paced world and changing
financial environment, the pressure to get insurance products to
market faster continues to grow.
Everyone –
agents as well as company executives and even regulators – wants to
see that new products get into the marketplace
quickly.
This pressure
was behind the development of the “speed to market” initiatives that
have been launched by the state regulators. Still, the process takes
longer than some people anticipate. This article will shed light
on why, and what can be done to improve
things.
In the area of
product approvals, delays often occur in the complicated process of
making filings and negotiating with regulators to achieve compliance
when regulations vary from state to state.
Often, the cause
of delays has been the “top drawer” rules of the various insurance
departments. A “top
Drawer” rule is one that resides in the regulator’s top drawer, to
be referenced when reviewing a new product filing. It represents the insurance
department’s interpretation of the rules, regulations and codes for
the state. Such rules
have previously not been available to company compliance
staff.
Another cause of
delay has been product filing strategies that are
self-defeating. If the
filing strategy is to get the filing “out the door” as soon as
possible, without configuring it to meet each state’s requirements,
a long drawn out negotiation process often results. Such a strategy may also
result in the return of the filing to the company - with a note
saying the filing is inadequate.
Fortunately, the
impediment to “speed to market” caused by top drawer rules is
quickly disappearing.
In the past year, at least 30 of the 50 states have changed
or modified their filing requirements and more (Maryland and
Minnesota, for example) have announced that changes are
forthcoming. Their goal
is to support the “speed to market”
initiative.
In particular,
most states have taken the steps shown in the chart on this
page.
This speed to
market initiative has shifted the burden of compliance to
insurers. The product
outlines and checklists are not necessarily required to be included
in the submission package, but if they are included, it
helps.
If regulators
see that compliance personnel have put in a good faith effort to
bring their products into compliance in the initial filing, it will
speed the review process.
Then, any negotiating should be on unique aspects of the
product that may not be covered in the product outlines or
checklists.
A good faith
effort, of course, means that the correct fees, certifications,
transmittals and/or an appropriate completed checklist is included
in the submission, along with a policy form that has been revised to
include any state mandated language and/or
requirements.
To facilitate
this process, states have provided, on their Web sites, the product
outlines and or product checklists, filing guidelines, and
frequently asked questions or lists of do’s and don’ts. The intent is to enable
filers to avoid the common mistakes. Those materials have proven
to be very helpful in preparing the filings.
In addition,
many regulators are sending their comments on the submission via
e-mail and allowing responses to be made in the same way. In our
experience, this has significantly contributed to the speed to
market initiative.
Furthermore,
states are using their websites to educate insurance compliance
personnel on the ins-and-outs of their state’s
process.
They are also
making an effort to streamline the review and approval process. This is being done by
imposing time limits upon insurers-and upon themselves-for
processing and responding to filings.
The message for
the insurance industry is clear: Insurance company executives-and
agents who sell, and sometimes help them develop, their
products-need to understand that true speed to market can only be
achieved by abandoning the old idea of sending the same filing
package to all the states, just to get it in the mail as soon as
possible.
Compliance
personnel must be given the time and opportunity to address a
product submission to each state in accordance with that state’s
requirements.
It is essential
to recognize that the burden of compliance is shifting to the
compliance professional, who must be given the tools to take on this
burden.
The bottom line?
To achieve the speed to market that everyone wants, the industry
needs to develop realistic expectations about the total time it
takes to get a product to market-from product inception to final
approval. It also needs
to support the new speed to market efforts of the states by adhering
to the website-posting filing guidelines.
Those who have
done so have found that, although the effort required on the
companies’ part is greater, the total time involved has already
gotten shorter. | 
