By Jeff Kulesus, FLMI, Consultant, Milliman, Inc.
Speed to market is a prime concern for new product launches. Perhaps no other factor has piqued speed‐ to‐market interest as much as the Interstate Compact.
The Interstate Insurance Product Regulation Compact (IIPRC, Interstate Compact or Compact) offers companies the opportunity to secure approval in 36 jurisdictions, including Puerto Rico in 60 days or less through a single filing.
To better understand the dynamics behind insurance company participation in the Compact, Milliman Inc. recently conducted a survey to identify why companies have not registered with or filed IIPRC submissions and to measure the experience of those companies who have already registered.
Of the 61 companies that participated in the survey, 40 (66%) stated they were not registered with the IIPRC. Twenty‐one (34%) of the survey participants are registered with the IIPRC.
Overall, the survey revealed a generally high level of satisfaction for companies now filing IIPRC submissions.
The main concerns for companies not yet involved in the IIPRC are as follows:
• Perceived IIPRC filing costs and cost‐benefit ratios are not yet favorable enough
• Key product standards (standards) have not been developed
• Companies feel they can obtain quicker approval of more complex forms or minor changes by Filing submissions outside the Compact
• The standards are too restrictive, stifle innovation, and apply the most stringent state requirements to all Compact states, and
• The IIPRC is not a priority to those companies that file a small number of filings in only a few states.
Although perceived cost is the primary concern for companies not yet registered with the IIPRC, companies participating in the Compact appear to have a more positive perception regarding Interstate Compact costs.
Of the 40 respondents not currently registered with the IIPRC, 16 (40%) indicated they will register with the IIPRC within a year.
The highest number of Compact filings are flexible premium adjustable life products, followed by whole life, term life, life benefit riders, life applications, and variable life submissions.
Overall satisfaction with the Compact was measured on a scale of 1‐7 with seven being the highest. Eighty‐five percent of IIPRC participants gave the Compact a rating of six, or higher, with no score lower than four.
Speed to market is ranked with 86% of the scores six or higher. Ease of use is ranked six or higher by 85% of the IIPRC participants.
Satisfaction levels dip, however, regarding IIPRC filing cost, with only 15% of participants assigning a rating higher than six, and with 70% of the respondents assigning a rating in the four to five range.
Companies are most satisfied with the speed of form approvals and the accessibility and ease of working with the IIPRC staff. These factors are closely followed by the benefit of securing multiple state approvals through a single filing while dealing with one set of objections (rather than resolving multiple objections from a diverse number of states), filing and administering a single generic contract form or forms in over 35 states, and greater ease in creating back‐end approval documentation. Most companies feel the standards are both clear and user‐friendly.
Main Compact‐user concerns include the lack of standards, the slow pace in developing new standards, and the length of time required to secure final agreement on new standards. Other concerns include confusion regarding state requirements versus IIPRC requirements, the possibility states may opt out of standards and the potential for unpredictable change in the product standards.
When asked what they would like to see changed in the Compact, companies noted they wanted more states and insurers to join the Compact, they wanted to receive notifications whenever a new process is adopted or a standard revised, and they wanted to see new standards adopted for Long Term Care, Accident & Health and other products.
One participating company summarized its feelings about the Compact stating: “They are doing an excellent job addressing concerns.”
Undoubtedly, the Interstate Compact is here to stay. It is addressing industry speed‐to‐market concerns in a unique and innovative way and will only get better over time.
Jeff Kulesus is a Consultant for Milliman, Inc. He may be reached at firstname.lastname@example.org.