The competition in the insurance market is fierce, and increased market transparency empowers consumers to compare different suppliers and choose the best deal matching their individual needs. Therefore, setting competitive prices and offering attractive packages are key differentiators to attract new policyholders. The pricing strategy is crucial for insurance companies since the claim/premium ratio should remain healthy. At Verzkeruzelf.nl the overall goal was by individualizing the premium structure for policyholders based on their customer profile, attain an optimal market share that had a healthy claim/premium ratio and size that allows to achieve economies of scale. Furthermore, they wanted to target the right customers and predict the consequences of premium adjustments on their key performance indicators.
To meet the needs of Verzekeruzelf.nl we created a powerful insurance engine named SURE. SURE sets insurance premiums based on predicted individual risk, loyalty and the pricing of competitors. It also predicts the consequences of a premium change on the number of policies, claim/premium ratio, turnover, customer lifetime value and the position in the market in relation to competitors. Hereby, SURE enables insurance companies to control their policy portfolio and effectively target the most relevant consumers. It provides the claim/premium ratio for all customer segments in real-time and gives insight in the most profitable segments.
Important aspect of SURE is that it uses data from all departments in the organization and thus takes more into account than just the claim history of an individual. It also considers Google Adwords results, demographic customer information, car characteristics and pricing of competitors. This enhances the accuracy of the given predictions, and enables to optimize the results over different internal departments.
The true added value of data science isn’t in gaining insight in the why or the root cause. Building Blocks helps us creating business value by proposing actionable measures that we can process the same day in our core systems, harvesting the results in the following weeks.