Introduction
The trade-off we're examining today is whether Northwestern Mutual should prioritize simplifying its term life insurance application process to increase new policy sales, or maintain more comprehensive underwriting to reduce risk. This scenario touches on the classic balance between growth and risk management in the insurance industry. I'll analyze this trade-off by examining the product, stakeholders, metrics, and potential experiments to inform our decision.
I'd like to start by asking a few clarifying questions to ensure we're aligned on the key aspects of this trade-off. Then, I'll walk through my analysis framework, covering product understanding, hypothesis formation, metrics identification, experiment design, and ultimately, a recommendation with next steps.
Step 1
Clarifying Questions (3 minutes)
Why it matters: Helps contextualize the urgency of increasing new policy sales Expected answer: Slight decline in market share Impact on approach: Would emphasize the need for innovation in the application process
Why it matters: Informs the potential impact of this decision on the company's bottom line Expected answer: 30-40% of revenue Impact on approach: Higher percentage would justify more resources for simplification efforts
Why it matters: Identifies specific pain points to address in simplification efforts Expected answer: High abandonment rate at medical history section Impact on approach: Would focus simplification efforts on streamlining medical history collection
Why it matters: Determines the feasibility and complexity of simplifying the process Expected answer: Tightly integrated, would require significant backend changes Impact on approach: Might need to consider a phased approach to simplification
Why it matters: Assesses our capacity to implement and maintain changes Expected answer: Small team of 3-4 people Impact on approach: Might need to consider cross-functional collaboration or team expansion
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