Time For a Pricing Checkup

Pricing is an important part of managing any insurance portfolio

A medical checkup can highlight priority health issues that need immediate attention so that more serious problems can be avoided. Similarly, a pricing checkup can help highlight potential changes that could significantly improve profitability, new business conversion, retention and customer satisfaction. This could mean, for example, introducing a new rating variable to improve profitability, offering a particular endorsement for free to increase retention or new business for certain segments, or better monitoring of changes in the mix of business for early detection of unexpected shifts.

  • Pricing isn’t easy

    Poor pricing is a leading cause of insurer insolvency. Insurers would like to grow their portfolios - retain existing customers and attract new ones – but in a way that is financially sustainable. Pricing is a key component in finding the right balance between growth and profitability.

  • Better pricing isn’t just about technology and analytics

    Just look at the recent pricing struggles of Lemonade and Tesla Insurance. Business knowledge and judgment are still important in pricing. Sound pricing is driven by using the right pricing analysis to help meet the goals of the business: this is not a one-size-fits-all approach. What better pricing means will vary by insurer and even for each insurer may change depending on their current priorities and concerns (eg improving profitability vs writing more new business).

  • Pricing is getting more sophisticated

    As well as understanding expected costs, pricing today needs to consider factors such as customer behavioural preferences and fairness. Leading companies have seen the benefits of investing more in pricing. This has helped them price more accurately and gain deeper insights into their book of business which allows them to make better, more informed decisions. This environment has encouraged new entrants to the pricing software market offering small and medium-sized insurers affordable ways to access cutting-edge pricing tools that would have been unthinkable even a few years ago.

  • Cooperate Consulting

    To learn more about how a pricing checkup with Cooperate Consulting can help your team contact us at shayan@cooperateconsulting.com or on LinkedIn.

    Cooperate Consulting is a Canadian actuarial consulting firm focused on P&C insurance pricing.

    We offer a unique blend of pricing expertise based on experience in industry, consulting and research.