This ‘experience curve’ is critical for many reasons, to give one example – customer behaviour (mix, lapse, asset allocation) has a significant effect on the cost of the guarantee. Balanced against these reasons for early action, are the risks of early stage product innovation. In Ingevity’sview, all funds should invest to at least understand this emerging space and develop an explicit strategy for how to react to it.

How should a fund look into this? Broadly
speaking, there are four key steps in the product development process: Concept/strategy
review; Product business case; Detailed product design ; Build, test and
launch. The resource commitment scales up with each step. A quality
concept/strategy review can typically be completed in one month, and nine to 18
months should be budgeted for the entire end to- end process. Andrew Robertson
is Managing Director of Ingevity Pty Ltd. Ingevity provides specialist
longevity and investment risk consulting to Australian superannuation funds.
Ingevity also offers a “plug and play” product suite to allow funds to develop
and issue products rapidly and cost-effectively.