Managing the Product Factory

The Insurance Product Factory makes it easier for you to streamline the creation, deployment and maintenance of insurance products, and product sub-components. This direct coupling along the product lifecycle makes place for better performance, also when it comes to portfolio management.

The products that you develop might transition between different business statuses - like Draft, Approved, Closed, or they might be updated to a new version, they might be the subject of special offers, or they might be part of recurring offers (but with limited availability), and so on. For all these cases and more, you use Insurance Product Factory to be on track with accurately recording and housing the said changes, control product behavior and, also, to efficiently organize the updated information.

Maintaining the products while they are active (exposed through quotation flows) and inquired into by multiple API calls, is yet another superlative of the solution.

IMPORTANT!  
For specific details about creating a product, consult the Creating Insurance Products page.

Related to this topic:

Below, an example of the Insurance Product Factory menu items:

Insurance Product Factory menu items

HINT  
The Insurance Product Factory maintains the underlying data in a consistent data model. Consequently, you have a reliable data model for your insurance products that you can reference when you build your digital journeys. This allows you to manage your product portfolio at will, without having to re-code your digital journeys every time an insurance product is added, updated, or retired.

Insurance Business Formulas

Insurance companies monitor the performance of their products to ensure that they can generate the required level of profit, which is the difference between net premium collected (income) and the cost of claims paid (expenses). Consequently, insurers must constantly adjust premium rates and coverage to maintain a balance between profitability and price competitiveness. Nowadays, this task becomes increasingly complex and requires an ever increasing amount of calculations.

Introducing the FintechOS Business Formulas... a solution that helps you reduce completion time for different types of calculations. It allows you to create, test, and activate your own insurance formulas (see the use cases below). You can also version your formulas.

In short, you configure the formula input - an input argument, or a list of arguments, a data set (which can contain financial or non-financial data), then a formula expression. Next, you test the formula. Once finished, you activate the formula. Once active, the formula can be mapped to different calculation targets - such as a product, or a step in a customized underwriting process. Then, every time the formula is called, the Formula Engine handles all the various calculations for you and generates the desired outputs, in an accurate manner.

However, a rate is only valid for a set time period... Underwriters set the rates (pricing level) for a risk based on the underlying frequency and cost of claims, and other variables that might change their values. Sometimes rates are too cheap (don't cover claim costs) or too expensive (uncompetitive) so underwriters must replace them with an amended rate which will be charged from an effective date. Specifically for this case, formula versioning allows you to ensure that the correct rating is used for charging, for any risk.

Hence, with Formulas, the complexity of a granular pricing engine is decoupled from the digital quotation system, or at least diminished, and kept in a dedicated environment. This helps control the cost of development and reduces the maintenance and update effort for your portfolio of insurance products.

FintechOS Formulas can support various business needs. But here are some examples that might interest insurers:

  • create formulas for premium amount calculations, insurance peril scoring, and underwriting evaluations.

  • create formulas for split calculations - calculations applied per product items (coverages), instead of the whole product, or calculations configured differently for individual or group purchases.

  • create calculation (or scoring) scenarios - series of formulas, executed in steps, following a defined order index.

  • create testing scenarios for your formulas - such as testing different product prices.

  • create formulas for underwriting insurance perils for different products, or product items (coverages).

  • create formulas for determining whether the policy proceeds further with an automatic flow or if it needs to go on a manual approval flow.

  • create formulas (with steps) that produce a status or decision regarding a quote - for example, establishing whether the proposed perils are insurable, after receiving data from a third-party system.

  • calling formulas from a quote configuration digital journey, thus allowing customers to configure their own insurance quote in real time.

HINT  
Formulas are vital for making your Insurance Product Factory work at its full capacity.

Bring Your Formulas To The Factory

The Insurance Product Factory solution provides access to your formulas and a testing functionality without leaving the context of your product, thus shortening the time from rating calculations to product launch.

In Innovation Studio, inside every product record:

  • The Premium Amount tab allows you to attach premium calculation formulas to the selected product, or its coverages (product items). For details, see the Premium Amount page.

  • The Underwriting tab allows you to attach scoring/ underwriting formulas to the selected product, or its coverages (product items). For details, see the Underwriting page.

  • The Test Calculations tab allows you to test your formulas based on different scenarios. For details, see the Test Calculations page.

NOTE  
Only one formula can be attached to a specified product, or coverage, at a time.

Check the following pages to find out about:

Demo Formulas

The Insurance Product Factory solution includes also an optional digital asset containing some demo formulas, so that you don't start the creation of your insurance formulas from scratch.

The following formulas are included:

  • Bankassurance_UW_Formula_Final

  • EmbededBankAssurancePremiumAmountFormula

  • HomeServiceBankAssurancePremiumAmountFormula

  • PA_Final_Premium

  • PropertyFormula

  • PropertyFormula_UW

You can read about them in the Demo Formulas page. A short description of the Import Formulas digital asset can be found in the Digital Assets page.

HINT  
For more details about configuring formulas, see the Business Formulas documentation and this Create Formula For Risk Scoring tutorial.