Insurance Product Development

Entering the Workers Compensation Line of Business: What You Need to Know

by Michelle Freitag

Workers Compensation (“WC”) filing activity is increasing as more and more insurance companies and InsurTech providers roll out WC products to round out their insurance product offerings. However, many of these companies possess only a limited understanding of the scope of what is involved in WC insurance product development. In the rush to market, they overlook important requirements that negatively impact the state filings process and stall their product’s release.
Before your company proceeds full steam ahead with your WC product, here are some important considerations to keep in mind.

Multiple rating bureaus and their products

Before an insurance company can begin writing WC they must affiliate with the appropriate rating bureau. The National Council on Compensation Insurance, Inc. (“NCCI”) is the designated statistical agent and rating bureau in 37 jurisdictions.  The remaining 14 jurisdictions have either licensed an independent state-specific rating bureau or provide workers compensation through a monopolistic state fund.  Companies will need to affiliate with the appropriate rating bureau before filing their product with a state.
Your team must be aware of the product offerings of the various bureaus in order to ensure you file everything you need. In most jurisdictions, the WC core product is already filed on your behalf and you are tasked with providing specific supplemental information. However, the amount of supplementation varies by state. It’s important to know exactly what information you’ll be responsible for submitting.  For example, schedule rating is allowed in Connecticut and is filed on the company’s behalf by NCCI in that state.  NCCI is also the rating bureau in Illinois and Illinois allows for schedule rating, but it’s not filed on the company’s behalf by NCCI.  So, if a Company wants to use schedule rating in Illinois, they must specifically file a schedule rating plan.

Creating a countrywide product is complicated

Many insurance companies think that they can develop a product that meets the requirements for a handful of states, then simply expand coverage to include other states. When it comes to WC, state filings just aren’t that simple. With so many state nuances that require careful navigation, it’s virtually impossible to create a countrywide product that will satisfy every jurisdiction.
Some jurisdictions have required mandatory offerings (ex. risk control services and small deductibles) that may or may not need to be filed with the state. Some states don’t allow schedule rating for WC. Others require drug-free workplace program credits. Mistakenly thinking you can use the same product features everywhere will slow down your state filings process.
Bringing a product to market is never as easy as it seems, particularly when it comes to WC. Unforeseen delays and close regulatory scrutiny are simply par for the course. Perr&Knight has assisted numerous clients in getting their WC products to market. We are knowledgeable about each state’s requirements, limitations and restrictions. For more information about how we can help you achieve successful and streamlined Workers’ Compensation insurance product development, contact our offices today.

Think Before You Act: Why Expert Solution Architecture Should Always Precede Critical Data Initiatives

by Joseph Allen

Deploying a data solution that addresses a real-world business problem is not just about drafting a quick set of specs and coding to meet those requirements. Instead, it’s about architecting a solution that will satisfy your true business need.
As experts in insurance data services, we have seen many companies dive headfirst into development without taking the time to outline a process that delivers not only their desired data set, but a viable strategy to keep moving forward.
Companies can sink deeper and deeper into development quicksand, increasing budgetary spend and extending the project timeline by piling more features onto both legacy and modern systems that don’t fully address the problem. To achieve lasting solutions that deliver maximum value, slow down and think before you act.

Focus on the problem, not the tools

Before you undertake any data initiative, it’s vital that you dedicate sufficient time and attention to define the full scope of your problem. We have seen companies get distracted by the latest, greatest software tools and fail to determine whether or not these tools will deliver the information they need.
Focusing primarily on tools is like shopping for ingredients without an idea of the meal you will be preparing. Instead, clearly articulate the problem first, then determine how you will utilize the tools at your disposal to solve this problem as efficiently as possible.
At Perr&Knight, most of our engagements are preceded by an in-depth workshop, during which we aim to identify the true need. Many companies think they need help with one aspect, but it turns out that addressing a different issue will solve their challenge. We apply our insurance data services expertise to determine short-term success as well as define a long-term solution that will help our clients avoid this situation in the future.

Outline specific future actions and activities

After assessing your problem, articulate the specific activities that you will take as a result of obtaining your data set. Knowing these actions informs the scope of what should be contained in your reports. Focus on obtaining useful information that will equip your teams to perform their jobs more efficiently and effectively.

Teams must understand how their roles support your business

IT teams might be deeply focused on technical aspects of the initiative but lack sufficient context for the project as a whole. As such, their expertise is stifled. Don’t limit your IT teams to only the execution of the plan – loop them in early to make sure that the ultimate solution takes into consideration your actual business needs. Spend time bringing your IT team up to speed on how their input fits into the bigger picture of your data initiative and what your overall goals and outcomes are. Equipped with this knowledge, your technical teams become more valuable project assets.

How to avoid “analysis paralysis”

Successful deployment efforts start with the known and build incrementally from there. Look for what you can define that will provide an immediate benefit. In the effort to plan for every possible event, software developers can end up overdesigning their solution architecture. Companies that want to create a massive system to address every possible future need often get stuck developing bloated, unwieldy software that takes forever to deploy.
Perr&Knight’s process is to plant a firm stake in the ground by targeting a specific data consumer with a specific need, then focus on building out just those portions. From there, we expand incrementally, generating deliverables that are definable, measurable, and achievable.

More expert tips to keep your data initiatives on track

  • DON’T cast too wide a net. Keep your eye on the specific problem you’re trying to solve.
  • DON’T chase trends. Make sure your solution delivers the information that addresses your core
  • DO make sure that you are being specific. There’s no point in coding to vague specs.
  • DO define what constitutes success before you undertake the project, including how you will measure progress along the way and metrics that ensure you accomplish various scope items throughout development.

The fact is, data reporting is not a sexy profit center – but it is a critical part of doing business. Everyone wants a quick plug-and-play fix, but solution architecture is more about business modeling than a strictly technical solution. There is no such thing as a silver bullet. Quality solution architecture starts at the business level, i.e. understanding your business problem and applying that knowledge as your guide to implement the best solution. Data initiatives are a marathon, not a sprint. Keep this in mind and you’re sure to go far.

For more information about Perr&Knight’s expert insurance data services, contact us today.

Unique Challenges of Travel Insurance

by Susan Cornett

According to the U.S. Travel Association, Americans took 2.2 billion leisure trips in 2016. This skyrocketing volume of leisure travel opens up new opportunities to develop additional creative products to protect travelers from a range of travel-related setbacks. Today’s travel insurance products run the gamut from standard offerings such as flight cancellation due to illness, to buying the first round of drinks after scoring a hole-in-one on the green, to covering your pet’s stay at the kennel when your return trip is delayed.
But travel insurance product development is like playing a game of Twister. Filing requirements for New Mexico? Put your left hand on blue. Florida? Right hand on yellow. When the dust settles, you’re left with a complicated balancing act of variables that shift according to jurisdiction and coverage.
When you file other lines of business, such as personal auto or homeowners, it’s usually the same SERFF TOI in all 51 jurisdictions. But travel insurance comes with a unique set of stipulations that vary by jurisdiction, coverage type and, in some jurisdictions, coverage amount.
During decades of providing regulatory compliance services, we have seen the ongoing changes that impact travel insurance policies. Here are some of the challenges that are unique to this evolving line of business.

The regulatory environment is changing

As travel insurance has become more popular, jurisdictions are taking a closer look at these policies. This increased scrutiny has resulted in several companies voluntarily entering into regulatory settlement agreements with various Departments of Insurance. Other companies are leaving the market entirely.
In addition to the Market Analysis Working Group (MAWG), NAIC also has a travel insurance working group in the process of drafting a new model law. NCOIL has also developed their own model. These new frameworks will require you to take a closer look at the entire scope of your travel insurance line of business:

  • If group coverage, is the master policyholder a valid group?
  • Are your distribution channels appropriately licensed for each jurisdiction?
  • How do your distribution channels operate?
  • Are the rates consistent across the channels, with all other variables (trip cost, residence, etc.) the same?
  • Do you have processes in place to monitor or audit those distribution channels?

To avoid stiff penalties, make sure you have established the appropriate regulatory compliance processes.

Install adequate support when offering inconvenience benefits

Many insurers are offering inconvenience benefits to make their customers’ lives easier when filing a claim. Things like ultra-quick disbursements or payments via PayPal. If your company is considering offering this level of customer service on travel insurance products, be sure that you have the right operational structure in place before you go to market.

Current regulatory settlement agreements can impact your offerings

Even if you haven’t been flagged for violation, make sure you stay current with the results of regulatory settlement agreements, so you are aware of what regulators are looking for. Your in-house teams or regulatory compliance services provider should issue regular reports to keep your product development team aware of the settlement agreements that can impact your offerings. The Missouri State DOI has compiled a list of the results of recent market conduct investigations, including settlement agreements. This comprehensive list is a good place to start.

Avoid benefit overlap

There is potential for benefit overlap with both A&H and P&C coverages when issuing travel insurance. Some jurisdictions require additional disclosures to remind consumers that coverage is limited or supplemental. Other jurisdictions are requiring insurers to clearly state that a trip cannot exceed 6 months. Otherwise, policies that are too rich in accident and health coverage might raise a red flag with the DOI, making it appear that you are trying to circumvent the Affordable Care Act.
In addition to accident and health considerations, insurers should establish a clear demarcation between traveler benefits and homeowners’ or renters’ insurance plans. Insureds should be reminded to review their existing coverage so that they are aware of overlapping coverage.

Be aware of regulatory requirements regarding excess

Some jurisdictions will not allow excess plans and will require you to be the first payer. These changes can affect rates and filing requirements between jurisdictions. Pay attention to details like this before you undertake the filing process.

Product architecture can vary by jurisdiction

Instead of a single countrywide travel insurance policy modified for each state, you may need multiple versions. This could be because a state requires a split filing (A&H and P&C), or a state doesn’t allow variability. A&H benefits in excess of $50,000? New Hampshire requires insurers to file the P&C coverages separately from the A&H. Check with each state’s Department of Insurance for product architecture requirements as you begin product development.
Hasty or sloppy travel insurance product development jeopardizes approval, which impacts your speed to market. Don’t jump into the travel insurance line of business without taking a careful look at what will be required for every policy in every jurisdiction.
At Perr&Knight, our team of actuaries and product development experts are familiar with the extensive list of requirements for both accident and health and property and casualty insurance. This deep understanding of both sides of the coin can help you navigate the challenges that arise when drafting travel insurance policies.

For more information about how Perr&Knight’s insurance product development services can help you increase speed to market on your travel insurance products, contact us today.

 

The Importance of Unambiguous Product Requirements: Why a Good Business Analyst is Worth their Weight in Gold

by Ken Ekers

Launching or updating a new insurance system seems like a straightforward process. But it’s common knowledge in the industry that a large percentage of projects hit roadblocks due to unclear requirements. This lack of clarity might initially seem like a small issue. But reverberations further down the line can have massive negative consequences to your timeline, budget, and ability to deliver the defined scope.
In this article, we’ll outline some of the problems that can arise due to ambiguous product requirements and discuss how working with an expert business analyst from a qualified insurance support services partner can start your project off on the right foot and keep it on track.

Evaluate where you are–and where you want to end up.

Charting a course for implementing a new process is not just limited to outlining a list of your project’s final requirements. It begins with taking an honest stock of your “as-is” process and determining clearly how you want it “to be”. This gap analysis enables you to look realistically at the strengths and weaknesses of your current system and the associated processes, and determine the amount of change that will apply to these processes.  It is important to include input and gain acceptance from your assigned subject matter experts (SMEs) and the project stakeholders affected by these changes.

What can go wrong?

All of your business processes and systems are so deeply intertwined that small problems can quickly spiral into much larger issues. If product requirements aren’t clear, the first line of defense occurs early in the IT project itself. Vague or incorrect requirements can be uncovered by the developers or testers. These requirements will have to be re-drafted. If the vague requirements make it through development and testing, the SMEs could possibly uncover the issue. That means that the BA will need to refine the requirement(s), developers will have to re-develop and the QA testers will have to re-test, etc. This additional work will create both an immediate and long-term unfavorable impact on your budget and schedule.
Unclear or incomplete requirements will also result in a sub-standard suite of test cases, which will lead to incorrect or insufficient testing. As a result, the quality of your product will suffer.
Your new IT application or system will have to integrate with other systems–it will have to “play nicely.” If your requirements aren’t drafted correctly, not only do you run the risk of not delivering the right product, your new implementation could significantly disrupt other systems and cause those to exhibit problems that in turn require correction.  The fall-out period after an implementation could run longer and deeper than projected.
Poor product requirements can create scope creep as your requirements start to veer outside the defined boundaries of your project’s goals. These expanded requirements will go on to get developed and tested, and will more than likely be rejected by the SMEs who will expand the scope a little further (e.g. change control) because the deliverable doesn’t quite meet their expectation. Before you know it, your budget and schedule will balloon.
Finally, improper requirements will eventually create an adverse impact on your business team. Releasing a product that ultimately fails means higher expenses and loss of revenue, a double whammy. Or, the business sponsor might be forced to move forward with whatever portion of the project is complete and still lack certain critical functionality. You’ll end up throwing good money after bad as you divert resources that could be spent on new business or writing more policies toward fixing preventable problems. In short, poor articulation of product requirements can cause you to risk losing your competitive advantage.
Luckily, most of these problems can be avoided. This is where an experienced business analyst comes in.

How can an insurance support services business analyst help?

A business analyst is dedicated to establishing clear requirements and keeping a close eye on the project through every stage. Not only do they bring professional industry experience to the table, but they will take the time to elicit input from business SMEs. This can be done via a combination of various methods including brainstorming, interviews, requirements workshops, and several other techniques. Each of these approaches is designed to reveal the true needs of the project effectively giving your project a boost with a set of clearly defined requirements that are within the bounds of the project scope.

Aren’t business analysts basically all the same?

Business analysts are not all equal. Right now, there is a shortage of quality business analysts in the U.S. market. Of the available pool, some lack effective training or experience. Alternatively, individuals might have been in business analysis for many years but still have a limited perspective or do not use best practices. It’s worth it to take the time to evaluate an analyst’s capabilities and track record before contracting their services.

How you can get the most from your business analyst.

Your business analyst can be a major asset to your project, but your organization must do its part, too. Here are some ways you can support your business analyst as they steer your project toward success:

  • Use quality software to manage your requirements. There are several tools out there on the market, such as IBM Rational, Jira, or CaseComplete, that can document and log your requirements, so each step is traceable.
  • Invest in producing quality requirements. That means building time into the schedule to produce clear and accurate requirements and devoting funds to support that phase.
  • Avoid low-cost business analysts. This could be a sign that they lack experience or confidence, and insurance support services is not an area where you should skimp.
  • Be willing to accept input from strong business analysts. They can possess valuable subject matter expertise in the insurance industry. They want to deliver a successful project, so be willing to listen to and act on their advice.

At the end of the day, don’t reinvent the wheel. Partner with industry experienced business analysts who can elicit and evaluate your requirements from various angles. This comprehensive perspective creates a clear roadmap and alleviates the chance of misinterpretation, making their services well worth the investment.
At Perr&Knight, we know where to get answers, due to our decades of experience in the insurance industry. We also have a complete set of resources to establish quality requirements right at our fingertips, including experienced actuaries and experts in regulatory compliance, filing, and product design. For project support at any phase of development, contact our offices and we’ll be glad to help.

Predictive Analytics and Insurance Regulation: 5 Tips for Success

by Denise Farnan

As the influence of big data continues to rise, insurers are utilizing analytic models more often than in the past. But when launching new predictive models for use in insurance programs, it’s never a good idea to submit your model to regulators without the right support. By applying a regulatory-focused strategy, you can ensure that the review process does not slow down your model implementation.

Here are our tips for success:

Tip 1. Prepare thorough data documentation

The models you create for use in your insurance programs will be reviewed by regulators. Make sure your documentation on the data used in the model is clear and thorough, such as disclosure of internal and external data sources, data quality and accuracy checks, handling of missing data fields, as well as any adjustments you made to the data, including capping, removing outliers, etc. Regulators want to be sure best practices are followed by the modeler who conducted the analytics. To ensure that your data documentation is clear, it’s beneficial to contract an outside actuarial consulting firm to conduct an external review of your analytic model prior to submitting to state insurance departments.

Tip 2. Provide strong analytic support

Once you have documented your data, you still need to provide regulators with model validation results. Did you follow best practices when generating your predictive analytic model? A thorough regulatory review will require analytic support such as correlation and interaction tests, the statistical significance of results, confidence intervals, lift charts and many other items. Someone familiar with the regulatory review of predictive models can help ensure you are prepared with the necessary support. Once again, this is another area where it’s smart to partner with an actuarial consulting firm to confirm the accuracy of your results and conclusions.

Tip 3. Be prepared for variations by state

Remember that states may require different levels of support for regulatory approval of an analytic model. Some states have questionnaires as part of the filing process for predictive analytics models. Do all of your data fields comply with state-specific rules regarding allowable data fields? Never assume that just because your submission went smoothly in one state that you can count on an approval in another. If you’re submitting in multiple states, a third-party consultant can save you from major setbacks by performing a compliance review of your model before you submit.

Tip 4. Adopt the regulator’s perspective

Take the time to anticipate the areas that regulators will watch closely. Consider questions and concerns they might have and address them upfront in your support. This will help you stand a better chance of fast approval. If you do have questions about how to best support your model, request to discuss these concern with regulators prior to submitting your model.

Tip 5. Predictive analytic support versus intellectual property

It’s understandable that when you invest so much work and so many resources in developing your model you don’t want to share your valuable intellectual property with the world.  Whether you have developed your predictive model in-house or are using an InsurTech vendor’s model, you need to balance regulator review with protecting proprietary formulas. Partnering with a consulting firm that is familiar with confidentiality requirements can help protect your work without slowing the approval process.
When it comes to predictive models and insurance regulation, the most important thing to remember is: be prepared. Make sure your documentation clearly outlines your predictive analytic process to support the use of the model and address any state-specific regulatory concerns. It’s in your best interest to have all pertinent information at the ready so the process proceeds as smoothly as possible.

For more information about how Perr&Knight can provide predictive analytic consulting services to help you navigate the regulatory process, contact us at (888)201-5123 x3.

6 Essentials Every Insurtech Company Must Know

by Denise Farnan

The avalanche of data now available to insurance companies is rapidly changing the capabilities of an industry that has historically relied on manual processes. Insurtech entrepreneurs are discovering new advancements in data capture and analysis that allow insurance companies to do their jobs more efficiently and effectively.
However, it’s important not to leap before you look. It’s wise to prepare for the business realities and regulatory scrutiny that are inherent in the insurance industry. We at Perr&Knight have provided insurance technology consulting for many emerging tech companies to assist them in advancing their product in the complicated insurance industry.
Here are some essential guidelines to keep in mind as you proceed through development and rollout. Disregard these guidelines now–and you may end up paying dearly later.

Do your homework

In the heavily-regulated insurance marketplace, product rollout is not nearly as fast as in other industries. Constraints including privacy rules, compliance requirements and standards that vary by state can throw a wrench into the best-laid plans. We suggest partnering with insurance technology consulting experts who can help you navigate the tricky regulatory environment.

Think bigger

You might have developed a product to help claims but its functionality has the potential to improve accuracy in fraud detection or streamline marketing efforts. Qualified insurance consultants can evaluate your product and inform you if there are other uses for your technology beyond its original application.

Test your tech on real data

Feed real data into your technology to demonstrate specific outcomes that you can share with potential clients or investors. Measurable results can also support your case when submitting to regulatory bodies, especially if your product is entirely new to the industry.

Prepare for regulator review

Complicated regulations apply to the collection, evaluation, and sharing of data in the insurance industry. It’s smart to prepare for the range of questions you will be asked by regulators (keeping in mind that rules not only vary by state but also by line of business) BEFORE you are ready to submit your product for approval. Preparing ahead of time enables you to respond to regulator inquiries quickly and completely.

Be ready to train

Even insurance companies that embrace new technologies will undergo a transition period where staff needs to become comfortable using your product. The most successful Insurtech companies put support staff in place to train users, answer questions and help companies through an integration of the new technology with their existing systems and processes.

Use expert evaluation to validate your product

Before investing in major upgrades, insurance executives want to be sure that new technologies will deliver results that justify time and expense. Insurance technology consulting partners help secure buy-in from execs with data analytics used to quantify and support your innovation.
Your product might be fantastic and your user interface might be seamless, but those are only a few pieces of the Insurtech puzzle. Experienced insurance consultants can complete the picture by providing you with insight and preparation for the complexities of the insurance market as it relates to your product or service, saving you from headaches, hassle, and wasted resources.

For more information about how Perr&Knight supports Insurtech entrepreneurs, contact us at (888)201-5123 ext. 3.

The Importance of Collaboration in Product Development

by Terri Hitchcock

Authors: Michael J. Covert, FCAS, MAAA, Principal & Consulting Actuary, and Terri Hitchcock, JD, Director, Product Design
Collaboration in your insurance organization occurs at multiple levels, all of which are important. During product development, your company’s internal collaboration among actuarial, underwriting and marketing departments is a must. External collaboration between your teams and outside consulting firms keeps your product design, compliance, and actuarial consulting partners on the same page. As consultants, on our end, collaboration between and among our own teams is crucial, as all our departments must operate cohesively to ensure that we can meet our clients’ needs in a timely fashion.
Successful collaboration is not just about making engagements run more smoothly–it also has tangible benefits that are immediately evident.

Collaboration leads to the creation of new and innovative products

Don’t waste time developing insurance products that you won’t be able to realistically implement or that your sales team can’t sell. When you solicit input from key departments, you’re able to think holistically about the products you develop and how they will best serve your customers. Begin brainstorming early with all relevant parties. Keep everyone involved throughout the entire process, to make sure you can adjust your product if needed and address potential hurdles likely to arise from regulators.

Collaboration helps consultants serve you better

Sometimes our clients think that partnering with an underwriting, operations, or a consulting firm like Perr&Knight gives them free license to hand over the project and never touch it again. While it’s our job to take on the lion’s share of the work in many cases, the most successful engagements are ones where insurance companies maintain at least some ongoing involvement. Yes, consultants provide guidance and produce recommendations, but there are still many decisions that can only be made by you. Non-involvement creates the additional need to track down required information that can slow down timelines dramatically and potentially result in needless errors.

Collaboration leads to faster approvals

Not only should all your internal teams and external consulting partners be on the same page, but you should loop in regulators as early as possible. This piece of the puzzle is often overlooked. Regulators are often seen as the “big bad wolf,” but the more open you are in your communication, the more of a friend the regulator can be. Another benefit is that, ultimately, fewer questions arise and less back-and-forth is required. 

Tips to maximize the benefits of collaboration:

  • Understand the need for your continued involvement with external consultants. Know up front the role you’ll be required to perform. At the onset of the engagement, confirm the expectations on all parts as to your required involvement. This will prevent possible misunderstandings down the road.
  • Facilitate ongoing collaboration among all involved parties when developing new insurance products or launching a new IT solution. For example, before you get too far into the development of forms and rates, make sure your IT infrastructure capabilities match what you want your policies/rates to do for you. Get input before you start making the big decisions.
  • Don’t rush too much. Never prioritize speed-to-market over thoughtful insurance product development and due process. By deliberately involving all relevant parties–from internal teams to regulators–you can avoid the oversights and errors that cause unnecessary delays.
  • For large engagements, implement regular status updates. In addition to a good project plan, weekly calls, emails and/or an ongoing status report allows everyone to see priorities and how the project is proceeding.
  • Trust your subject matter experts. Whether you’re launching an entirely new product or tweaking an existing product, solicit input from product design, compliance, and actuarial consulting firms before going deep into development. This will help you understand realistic expectations about the viability of your proposal and your estimated timelines.

Remember, ultimately insurance is a people business. At the end of the day, the decisions you make will have a real-world impact on the individuals and businesses you serve. Don’t hesitate to pick up the phone in place of an email. Sometimes the most effective form of collaboration can be simple voice-to-voice communication.
For ideas about how to facilitate greater collaboration within your organization or with consulting partners or regulators, contact Perr&Knight at (888)201-5123 ext. 3.
 

Speed-to-Market Tips for New Product Development

by Karen Barrett Daley

Speed to market is always important when it comes to introducing new insurance products. In general, all companies require efficient insurance product development, but in certain cases it’s non-negotiable, such as when a company wants to enter into an emerging market and quickly gain market share, when program business is being moved between carriers and they can’t risk a lapse in coverage, or if an existing carrier is trying to accommodate a large account that has an immediate additional coverage need.
As decades-long providers of insurance product consulting for hundreds of insurance companies across every jurisdiction, we have determined the actions that can significantly impact the speed at which a new product is rolled out.

Here are some important tips to accelerate new product development:

Know your market.

Understanding your market means a couple of things. First, know who your competitors are. Examine who’s writing, what they’re covering and charging, their profitability and their market share. Next, get to know the environment from a regulatory standpoint. Look closely at how the Departments of Insurance (DOIs) treat the line of business in the states in which you will be writing.

Confirm that your company is licensed to write the new product.

Sounds obvious, but plenty of insurance companies rush past this step and pay for it later. Amending your certificate of authority is a lengthy process and, as such, needs to be addressed early on by someone familiar with the company licensing process. Double check first, so as not to waste time and resources on stalled product development.

Flesh out your coverage and check for consistency.

Once you have conducted research and developed product concepts, draft the policy forms, then calculate the rates and premium that will be charged. Make sure your form contains clear, unambiguous and, if possible, tested language, your rates balance competitiveness and adequacy, and your rates and forms are consistent, i.e. that they make sense together.

Ensure your product is compliant in the states you want to write.

It is unlikely that all states will allow you to write the exact product you want.  Rather, you will likely need to modify the product, at least a little bit, in each state in which you write.  Before filing or implementing your product, conduct a thorough compliance review on both rates and forms, making adjustments as necessary. Shortcutting this crucial step in the product development process will likely result in delays, rejections or time-consuming questions from DOIs.

Be smart about your state filings.

Before starting the mechanics of the filing submissions, you should strategize about how to optimize the outcome of your state filings.  Learn about and consider incorporating any rating flexibility that is available in your states to create a more robust rating manual. Take advantage of confidentiality rules to prevent competitors from seeing every aspect of your rating model or underlying support. Determine the priority order of filing submissions by considering DOI turn-around times, filing laws, filing support requirements, desired launch dates and projected premiums by state.
When it comes to releasing a new product quickly, the single most important rule is this: approach insurance product development in an organized manner. Cutting corners will almost always result in re-work and undue delays on the back-end.
Product development is a process that requires expertise in many different insurance-related specialties and extensive industry knowledge. If your in-house teams are not equipped to handle the time-consuming specifics or manage the critical details, partner with an insurance product consulting firm whose industry, marketplace and compliance experience can get your product to market quickly and cost-effectively.

To learn more about how Perr&Knight helps insurance companies release new products intelligently, download our Product Expansion Services brochure.

7 Pitfalls to Avoid in Providing Accident & Health Product Rate Filing Support

by Crystal London

Going through the process of a nationwide rate filing, or even filing in just a handful of states, can be a complex and lengthy process. Addressing the specific requirements of all 50 states plus DC, and provinces can get overwhelming, especially with new product filings. Each state has different filings requirements, and sometimes the differences between states are dramatic. No matter what, your end goal is profoundly important: to avoid objections, disapprovals, or the need to withdraw your filing. Ensuring that things are done properly from the get-go will make the process more streamlined in the long run.
In our decades of providing insurance state filings service for companies in all jurisdictions that write all lines of business, we’ve seen many of the common mistakes that result in lost time and wasted resources. These pitfalls can be avoided–if you know what to look for and how to take action.

Pitfall: Not knowing all state regulations and statutes

This is the single most common trap we see in state filings. Understanding the specific requirements for each state is a complicated and cumbersome process. But there’s more to it. In order to make sure your filings proceed smoothly, you also need to be aware of what we call “drawer regulations”–the unwritten rules reviewers may follow but aren’t written into the state statute. Knowing the written as well as unwritten requirements can reduce the chance of your filing being kicked back. Working with a knowledgeable actuary or state filings unit can help significantly when it comes to knowing these regulations.

Pitfall: Not knowing each state’s minimum permissible loss ratio requirements

Each state has different minimum permissible loss ratio requirements, which in turn affect rates. First and foremost, these loss ratios vary by group versus individual coverage. Individual minimum permissible loss ratio requirements are often based on NAIC individual loss ratio guidelines, however, not all states follow this guideline. Furthermore, some states extend the NAIC guideline to group coverage, while other states have their own requirements. Loss ratios can also vary by type of coverage and renewability clause, as well as invoking low or high average premium adjustments. Your rates will be different in those states based on those specific regulations. Be sure to equip yourself with these important pieces of information prior to filing to make sure you provide for the correct loss ratio for the type of policy you’re writing in a particular state.

Pitfall: Not knowing which supporting documents should accompany your filing

As we have stated before, it’s smart to file exactly the supporting documents that your state requires–and nothing more. Some states require that you submit transmittals, checklists, rating examples, underwriting guidelines and/or experience rating guidelines. Some states also have specific requirements for components that need to be included in the Actuarial Memorandum. It is also recommended to restrict the information you provide to only what is necessary to reduce the number of objections and questions; otherwise, you risk opening Pandora’s box.

Pitfall: Not taking into account time it takes to address objections

While all state filings may receive objections, limiting your number of objections not only preserves your company’s reputation with the reviewer, it reduces the amount of time required to respond, thus keeping you on schedule. In certain states like Florida, the department of insurance tries to turn around a review in 30 to 45 days. If that time period is close to expiring and you can’t respond quickly enough to the objections you receive, you risk disapproval or needing to withdraw your filing altogether.

Pitfall: Prioritizing speed-to-market over due process

Most of our clients want to offer products with the goal of launching them in as many states as possible, as quickly as possible. Due to our experience as an insurance state filing service partner, we know which states are file and use versus prior approval. Certain states allow you to begin marketing your product the moment you hit “submit” on your filing. Others require that you receive full approval before you can market your plan. Knowing the correct state standards can save you from serious infractions.

Pitfall: Lacking an end-goal for the product

It’s always a good idea to make all stakeholders sign off on your entire product, from forms to rates, in the planning phase before you get to your actual state filings. If you want a particular product to have variability, your rates need to coincide to reflect those variations. If you don’t outline these details going into the initial filing, inserting those components after the filing process has begun may require re-filing. This can be costly, time-consuming and frustrating for your entire team.

Pitfall: Inconsistency between rate manuals and forms

Inconsistency is a surefire way to elicit questions and objections from the reviewer. When we provide insurance state filings service to our clients, we always work closely with the product design unit and forms department to make sure that rate manuals are consistent with forms. This is especially important when a product’s allowed benefits vary from state to state and impact rates. Double check all relevant documents to make sure everything matches.
State filings are a complicated process that requires close attention to detail. A seemingly minor oversight can have a huge impact down the line. It’s always a good idea to partner with state filings experts who can help you manage your filings and make sure all your ducks are in a row before you begin.

If you have questions about how your filings process can be improved, contact Perr&Knight and we can discuss ways to streamline your operations.

Expert Tips to Avoid Accident & Health State Filings Form Rejections

by Susan Cornett

State filings form rejections waste your company’s time and money. When you are forced to resubmit your forms, your company is on the hook to resubmit state filing fees (where applicable) and SERFF fees. These fees might be nominal in some cases, but if you are required to resubmit multiple forms in multiple states, they can range from a few hundred to thousands of dollars. Depending on the state, when you resubmit, you also run the risk of re-starting the approval clock from zero. This can result in delays of weeks or months, and lost revenue due to delayed insurance product releases.
During our decades providing state filings services, we’ve seen almost every reason a form is likely to be rejected. We also know that many of these setbacks are avoidable. Here are some of the most common mistakes that lead to rejection–and what you can do to prevent them.

Tip #1: Pick the appropriate type of insurance (TOI)

When you file through SERFF, you must specify the correct code for the exact type of policy you are submitting. In most cases, a sub-TOI is also required. These codes are crucial because they let the department know what to expect when reviewing your forms. The reviewer evaluates your form through the lens of your selected TOI, looking for particular information. A wrong TOI code subjects your form to review under the wrong classification and may result in unnecessary objections. It can also make your submission look sloppy. Submitting a filing under an incorrect TOI is one of the fastest ways to get your form rejected outright.
NAIC publishes updated codes every January. Each state’s DOI has the authority to control the number and types of insurance codes that they accept each year. Depending on the types of policies issued in their states, commissioners can “turn on and turn off” codes at their discretion. Insurance consulting companies that offer state filing services regularly review these changes, looking for new codes that apply to emerging products and codes that are no longer in use.
But what if your policy doesn’t exactly fit a particular TOI? No matter whether your product is an exact fit or not, you must pick a TOI code. For policies that don’t exactly match a particular state’s TOI code in SERFF, select the code that most closely aligns with your policy, then address individual points of variation in the filing description. Unfortunately, there are no guarantees that a reviewer will read your description, but it’s your best course of action. If you’re unsure about which TOI to select, work with an experienced insurance consulting company that specializes in state filing services. They’ll help you evaluate the code that most closely applies to your form.

Tip #2: For group policies, correctly identify your market

Selecting the correct group designation (“employer,” “union,” “association,” etc.) is hugely important. Your form is subject to rejection if the designation is incorrect or does not match what is allowed in a particular state. As with correct identification of TOI, the self-designation sets the lens through which the reviewer will check your forms. If you are missing required accompanying forms (i.e., association by-laws) for a particular type of group designation, your filing is likely to be rejected.

Tip #3: Pay close attention to the requirements of each state and line of business

Checklists, transmittals and certification requirements vary by state and by line of business. Health-specific plans that are subject to the Affordable Care Act (ACA) require additional considerations, including form and rate requirements and other ancillary forms. It’s easy to get lost in the weeds. You must have a clear understanding of the questionnaires and filing certifications required by each state. These requirements are usually­–but not always–listed on SERFF. Pay attention to these details. Missing or incomplete information will stop your filing in its tracks.

Tip #4: Include required information–and nothing more

Pay close attention to the specific information that should accompany each filing. Include what is required by SERFF but do not include additional information. Doing so can open your filing up to questions and confusion.
The sheer volume of work required to track filing requirements that change frequently and vary by state can present challenges for internal departments at most insurance companies. We recommend working with an insurance services partner who provides detailed content reviews as part of their state filings services. Their breadth of experience and deep understanding of all specific statewide filings can save you time, money and runaround.
When it comes to avoiding state filings form rejection, the most important thing is to take your time. Hasty work leads to oversights and careless mistakes that can set your filing back to square one.
Have questions about your state filings process? Contact us today to speak to our state filings experts.