A lot of decisions are made when bringing a new insurance product to market. Seemingly small decisions made early in the process often have the largest impact.
What is a “me-too” filing?
Simply stated, it is taking the insurance form, rate, rule work filed by another company and making a copy (hey, hey, me too!) filing for your own use. “Me-too-ing” does not eliminate the need to file the product on your licensed company’s paper nor does it give you an automatic approval.
Why do companies do it?
There is an assumption that the me-too process will (1) take less time, (2) be less expensive and (3) has built-in credibility of having been deeply evaluated by not only the regulators, but the carrier behind it.
The adage “you can have it fast, cheap, or good; pick two” applies here. A me-too approach isn’t bad per se. After all, the original filing was intentionally developed by its originator with their business strategy in mind. Thus, making a decision to materially follow someone else’s filing isn’t without risk.
Will it take less time?
Taking a me-too approach does not guarantee an approval, or a speedy one. Each state has its’ own requirements for product acceptability and as new regulation is adopted, these new requirements will be imposed upon your filing. If the examiner assigned to the originating filing misses something in their review which would have caused the originating filing from needing to be corrected; unfortunately, this happy miss doesn’t trickle down to your filing. You will need to navigate the objection and satisfy it, adding cost and time to your filing.
There are merits of performing a me-too filing. Product development acceleration can be achieved under certain scenarios; (1) when there are deep similarities in product strategy from one product to the next, (2) carriers looking to me-too their own products to make them available for use on additional carrier papers, and (3) support the move of MGA/insurance programs from one carrier to another.
The similarities in the three scenarios come down to intent. The intent of the approach follows the leaders original design and outcome of the product filing.
Is it cheaper?
Without a doubt, starting from someone else’s work provides you with a running start and should decrease some of the effort that would have taken place if one were starting from a blank sheet of paper. However, it does not eliminate all the work or expense.
Some of the work which must always be done includes actuarial memorandums, exhibit work, Loss Cost Multiplier and expense work, side-by-side exhibits, and work to support the pricing is non-discriminatory, adequate but not excessive. When proprietary coverage language is being used, care must be made to protect against copyright infringement. So, while a head start can be made, you are still responsible to satisfying all of the regulatory requirements in place at the time of your filing and this means the creation of some new content.
Here is what is at risk in taking a following approach:
Unless you had a proverbial seat at the development table of the originating company when that product was developed, you cannot know what decisions were made by the lead company anchoring their product or rating decisions, what problems they intended to address, and how their decisions will inevitably impact your results.
Using another carrier’s coverage language without performing your own coverage counsel reviewing through the lens of your business is mitigatable risk. The per-hour-cost of having your forms reviewed by coverage attorneys will always be less than the claim you didn’t intend to pay.
Are you performing a me-too of the original, or a me too of a me too of a …etc.? When the source is lost, the ability to understand intent is lost too. As insurance professionals, we serve our customers by providing protection when the bad day happens. When we understand the risk we intend to protect, we can build the insurance mechanism to respond to that risk. Sometimes, the best approach is from the ground up, without someone else’s words obscuring the path forward. This goes without saying for break-thru products developed to tackle emerging risk.
How to mitigate the risk:
Formally or informally, the ability to look far enough ahead to help identify what architectural product rules or rate structure best aligns to get you there, is a smart move. This is about avoiding the penny-wise pound-foolish outcome that happens when you make a “get it in market quick” decision only to learn about the operational heartache that follows when a material change needs to be made, implemented, which then requires notification to your in-force customer base of a change - expensive and disruptive, on multiple fronts.
If you are uncertain about what your product or rate strategy needs to be to get you where your company objectives require you to go, solicit the input of an experienced product development strategist. The product development process starts with understanding the business problems you are looking to solve; and with a strategic lens, employs winning product and implementation tactics to get the right product created with the right price approach in a manner that supports economical efficiencies to managing that product post-launch.
Performing a me-too filing can be an effective strategy in certain cases, If the me-too approach is utilized, seek the advice of those who have navigated the filing and post implementation process to put you in the position you intended.