SoA5, Group 36 (Product Development)

[OT]

SoA5
Group Chapter 36 (Product Development Process)

Anyone get mixed up between the following lists from the Product Need section?
1) Evaluating the Group Product
2) Stragegic Fit of Group Product
3) Clarifying the Group Product

I'm trying to memorize lists and keep getting them mixed up. Perhaps the proceed basically from more general and theoretical to specific and practical.

Any thoughts?

[Kimi]

Basically, way I see it is as follows..

1) Evaluating the Group Product (non-company specific/centered analysis of product)
2) Strategic Fit of Group Product (product-to-company fit)
3) Clarifying the Group Product (company specific/centered analysis of product)

[Enough Exams Already]

I didn't see anything in that section that wasn't in the LIP&F section on design, except for maybe some consideration of financial underwriting for employee benefit plans. Both seem to have a lots of overlap; maybe an easier way to remember the material and keep it straight would be to carve up the topics in Bluhm into the same scheme as in LIP&F. Just a thought....

[Axsuetarian]

I wonder if we could just skip the G.I chap 36 altoghether and stick with LIP&F Chap 2

Do you think we could get away with it (meaning would they ask: Define the GROUP product development process at stated by Bluhm et all)?

[Enough Exams Already]

Maybe with: "Compare and contrast the development of individual life products with that of group life products." That might cause a problem if you haven't studied Bluhm Ch. 36. And I can see them asking it....although that may be exam stress talking.

<font size=-1>[ This Message was edited by: Enough Exams Already on 2001-10-18 12:44 ]</font>

[Axsuetarian]

EnoughExamsAlready:

What would you write as your answer to that question. I can't see any differences really. I mean the Indiv. lists are pretty logical and the group lists are a bunch of hodge-podge

[Single Mom]

Could this be an exam question? You are an actuary for XYZ company. XYZ is considering entering the long term care marketplace, a product they do not currently write. XYZ currently writes both individual and group health coverages. Marketing wants to file the LTC policy as an individual policy. Compliance wants to file it as a group policy. Evaluate the pros and cons of filing as a group or individual policy and how product development would differ. Give your recommendation to management.

[OT]

After reading Single Mom's sample exam question I lost my appetite. But seriously thanks for the dose of exam reality. I am interested in seeing peoples responses to you question. Initially, no “list” comes to my mind.

[yeppers-wsmn]

Yes. If I read that question in the exam, I would throw up directly on the paper, put it in the envelope, and move on to the next question.

Seriously though, that does sound like a legit question, I would love to see some responses. I'm working on one right now...

[OT]

I'm barely going to get in what I feel I need to for C5.

Not much said about long-term care on group side. (Group page 124) Although expense reimbursement for day care is mentioned as an optional benefit of long-term disability.

I believe that last year there was a question about the features and basic requirements to collect group long-term disability

Single Mom,

Where did you get that question? Was it made up from an exam taker or an instructor of sorts (Carmody, etc.)?

[aNoNo]

I'll try and throw out a few thoughts on the question posed by SM.

The essence of the question seems to be the implications of an INDIVIDUAL product versus a GROUP product. So here are some thoughts about that:

Underwriting Differences:
INDIVIDUAL products can have stricter underwrting, e.g. full medical if desired.
GROUP products typically have limited underwriting, e.g. simplified issue, actively at work.

Loss Ratios:
INDIVIDUAL products tend to have lower loss ratios to cover more overhead (especially higher commisions compared to group) and also more variability in claim results (law of large numbers).
GROUP products tend to have higher loss ratios and can still be profitable (lower commissions and less variablity of results).

Regulations:
INDIVIDUAL products tend to have stricter state filing requirements including approval of rates.
GROUP products tend to have looser filing requirements with rates not needing approval.

Distribution Systems:
A distribution system that has been selling INDIVIDUAL products will probably not be very effective in selling a GROUP product. Since LTC is a relatively new product, it probably needs to be "sold" one on one rather than offered in a mass solicitation. INDIVIDUAL products with personal agents making the pitch are probably better suited for LTC.

SUMMARY:
I would recommend going with the INDIVIDUAL product approach for the followng reasons:
* Better underwriting for a relatively new product with not a lot of credible experience to use in pricing.
* Because LTC is relatively new and not well understood by the general public, personal agents selling one on one to potential customers will probably be more effective.

You could proably throw in some product development "list" type of stuff as follows:

Evaluate internat and external factors.
* Internal- Mission, Vision, Resources
* External- Economy, Taxes, Regs, Competitors

Market Research:
* What does the consumer want?
* What is the competition providing?
Does the consumer want an INDIVIDUAL or GROUP product?
Are LTC competitors selling INDIVIDUAL or GROUP products?

Pricing:
How would claims expereince vary based on INDVIDUAL underwriting versus GROUP underwriting?

Implementation:
More policy form filing effort required for INDIVIDUAL product.
INDIVIDUAL product more labor intensive to administer, e.g. GROUP product may be employer sponsored with payroll deduction for premiums.

Product Management:
INDIVIDUAL product may take longer to generate critical mass sales volume compared to the GROUP that could be mass marketed relatively quickly by aggressive Group reps.

<font size=-1>[ This Message was edited by: aNoNo on 2001-10-19 08:15 ]</font>

<font size=-1>[ This Message was edited by: aNoNo on 2001-10-19 08:16 ]</font>

[Single Mom]

I'm sorry. I didn't mean to upset anybody. The question came to mind because we are struggling with a similar situation here at work. When I saw this thread wondering if there really is a differnce between the two sources, I thought our "real life" scenario applied. I think it is one of those questions Carmody would call a "creative one" - no list from one source, just go with it. The one on last year's exam about selling a product (UL I think)over the Internet was that way I thought. So, no it is not on the syllabus directly. Anono, if I was on the exam committee, you'd definitely get full credit for the question! I apologize for causing any of you extra stress in an already overly stressful time.

[OT]

SM,

No reason to apologize what so ever. I did not mean to communicate alarm. I was, however, interested in the source of the question. Thank you for the initial question and response. I would encourage more.

<font size=-1>[ This Message was edited by: OT on 2001-10-19 14:54 ]</font>

[thing]

going through the archives and thought Single Mom's example was so good this deserved a :bump:

[expo]

This question came up on the 2001 exam, group proudct development. All of these lists were contained in the model solution for that question. I would really like to see it not come up again, but not going to take that chance.

[dinosaur]

I hate that list! :moon: Actually hoping they ask a question about Group Product Design in Product Development since it hasn't been asked yet.