Solutions > Pricing Sophistication and Accuracy for Property and Casualty Insurance 

There are more than 3,000 property and casualty insurers in the U.S., and they're all looking to the same pie for business.

Clarity can help you get a bigger piece through more sophistication and precision in your pricing.

If we were to hold up a single industry as an example of the rewards possible by asking new questions (and the consequences of not asking them) we’d probably choose property and casualty insurance.

There was a time not too long ago when most P&C insurers priced their policies using the same factors, which were, in a word, the obvious ones. Pricing models were pretty simple and standard, so competitiveness depended largely on how a carrier managed agents and served customers.

And then with the advancement of computing power and actuarial science, some carriers aggregated their policy and claims data, took a hard look at it, identified new variables, and got inventive with their questions. With the answers revealed in the data, they started prototyping broader pricing models and rolling them out.

The playing field changed. Insurers who built skill sets around the data grabbed market share from the insurers who didn't. And then a few of the real visionaries pioneered the use of the consumer credit score to predict customer profitability and risk. The industry was revolutionized.

Except not for everybody. Pricing sophistication solutions were not, and still are not, off-the-shelf applications; they take time to build, test, and deploy, and they demand specially trained analytical resources. So plenty of insurers were, and still are, stymied by corporate culture and technical obstacles. They continued to rely, as many still do, on the strength of their brand, the lack of consumer visibility into the true range of price options, and the stickiness of customers with multiple policies.

Which kind of P&C insurer are you?

If you're a company with a narrow pricing model and no core competency in data modeling and analytics, it's time to ask yourself how long you're willing to bank on things like brand and customer inertia. With the range of new data stores and analytics solutions, big data capabilities are reaching even smaller companies now. And with the general availability of more information, customers are gaining more insight and power with each point and click.

On the other hand, if you're a middle-of-the-pack company, you need a way to pull ahead without a capital investment that does more harm than good to your bottom line.

And if you're on top, you need not only to stay there, but innovate, because your competitors are catching up.

However you might characterize your market position, Clarity offers an end-to-end, risk-based Pricing Sophistication and Accuracy solution that can take you to the next level of maturity in your pricing models.

Our Pricing Sophistication and Accuracy Solution for P&C Insurers

Clarity provides a team of business analysts, statisticians, architects, and developers who work with you to:

• Harness the explosion of policy and policy holder data. We help you:
• Transform the time series of events for a policy into earned premium observations, and combine these observations for all of the policies you issue.
• Layer in policy dimensions (policy holder attributes, behavior, and financial history).
• Continually add experiential claims data (claims progression and development over time), and link this data with premium observations.
• Include state rules and regulations.
• Account for customer churn and growth.
• Integrate incremental and historical data from multiple policy administration systems and third party providers.
• Build an internal proxy for credit score using customer payment history (receivables).
• Customize our conceptual solution architecture for pricing sophistication to your envronment. This architecture includes an enterprise data warehouse structured according to subject area, along with data marts for policy premium data assets, in-force premium and retention data assets, claims data assets, loss ratio data assets, and receivables data assets.
• Analyze and understand the characteristics and patterns of premiums earned over time and claims made against them.
• Use this knowledge to predict risk more granularly, and to price policies more profitably.

You still need to manage agents well and provide outstanding customer service. But now you can compete on analytics, too. Contact us for more information.