Product Modelling – 101 (Product Component)

In this second post in the ‘Product Modelling 101’ series, we’ll be introducing the Product Component used to define the overall 'Product Structure'.

The Product Component is represented as a pink rectangle (see above) and organised in a hierarchy that defines the backbone of the product model on which all other detail is positioned.

After gathering product information, we focus on defining the product structure as it provides a good understanding of the marketed product and how the different coverages relate to each other.

For example, a simplified snapshot of our Travel product is shown below:

As you will see in the example above, there are different types of Product component used and here's some of Systemize's definitions from our sample repository:

Marketable Product: The product that is sold in the marketplace.

Coverage: One or more related benefits. Coverages are typically not claimed against directly. There is potential for premium rating at coverage level. Examples include:

• Business Extension,
• Contents,
• Buildings,
• Comprehensive,
• Towing.

Benefit: The lowest, 'leaf-level' of a policy decomposition. Claims are often made at this benefit level. It is recommended to price at this lower level to maximise reuse of the components in other future product offerings. Examples include:

• Medical Expenses,
• Business Samples,
• Emergency Courier.

Structural Component: A product component used to provide overall structure to the product model with no notion of cover in itself. Structural components can be used as a grouping mechanism for a business collection of components (e.g. for shared roles, rules or multiplicity (repeating groups)). Examples include:

• Contents Related (collection of related coverages),
• Motorcycle / Vehicle Coverage (where multiple bikes / cars can be insured - repeating group).

In PMW, the types used to qualify a product component (and other modelling components) are totally configurable to meet the terminology of a particular customer. NB: Some companies have switched the definition of Coverage and Benefit such that Coverage represents the lowest level of decomposition of the product. Which definition used is a company decision but it is important to be consistent.

The valid attachments to a Product component include all other modelling components with the exception of Allowed Value Lists (we'll cover the other modelling components in remaining posts) :

The Product Diagram provides a great way to quickly understand the product structure and scope. However, we also need to capture the textual descriptions (metadata) in support of the visual representation.

From a tooling perspective, many people start with Visio for the diagrams and Excel for the supporting text. However, there are purpose-built tools available - PMW being one of them.

The following Product Specification Report is a cut-down output from PMW showing the Platinum Travel Product filtered on all ‘Product’ components. NB: Only a subset of the PMW metadata available has been included in the report.

The next post will look at the Agreement-Specific data and consider property specifications, constant properties and allowed values.