New Delhi, Sanjay Dutta. Insurance companies keep bringing new products in the market according to the changing needs of the people. These help insurers to stay relevant in the market. At the same time, they keep increasing their revenue and their position in the market also remains strong. However, many things have to be taken care of in developing or making a product, in this article we will mention those processes.
What kind of products and offers are already present in the market.
What are customers looking for in a new product or offer? How are they meeting their needs?
What other products are competing companies offering similar to them?
What is the market size of the new product or offer in terms of revenue and profits?
– Will this product be unique to the market? If so, what would be its impact on consumers and the industry?
In fact, meeting the needs of the customers is the ultimate goal. Therefore, it is easy to promote such a product in the market, which understands the problems of the customers and fulfills their needs. The data gathered after the market study is used to tailor the product to the needs of the target audience (the kind of customers you think you need to reach).
understand the risk
This is the next step in the development of an insurance product. Insurers identify the risk associated with the product by this. The population targeted at which this product has been launched may not prove to be profitable for the insurer. Therefore, there should be a strategy to launch the product which is long lasting in the market.
If a plan (insurance product) is discontinued or withdrawn, it hurts the sentiments of the customer and dents the insurer’s brand image. Apart from this, the time, effort and money spent in developing a new product is wasted. If the product does not last long in the market, then it hurts the revenue of the company.
pricing
After understanding the risk associated with the product, it is time to decide its price. This is the most challenging task for insurance companies. In other businesses, the price of a product is determined on the basis of its cost of resources and profit margin. But insurers do not get to know the cost at the initial stage of selling their product.
The actual cost of the product is known only when the claim is paid. Therefore, insurers rely on historical data that can predict future risk trends. Based on this, they decide the premium and the price of their product. Keep in mind that price optimization is essential to remain competitive in the market.
Filing in IRDAI for approval
Before launching any insurance in the market, it is necessary to file it with the Insurance Regulatory and Development Authority (IRDAI) and get its approval. Keep in mind that it has to be filed in IRDAI in a prescribed format only. In this format it is necessary to explain everything about this product. It has to give details of everything from product features, target market and distribution channel. A product is approved only when all the criteria are met. After the approval of IRDAI, insurance companies take the marketing initiative for the launch.
And finally..
Product development is a complex process. Insurers have to take care of many internal and external things before starting a new product or new offering. Its external aspects include digital distribution, anytime and anywhere service expectation. On the other hand, internal aspects include increased profits and distribution channel diversification.
