Toronto, ON (Jul. 30, 2013) – Typically, ratemaking involves three basic activities, says Insurance Business Analytics consultancy InEdge. These are segmenting the Book of Business, setting rate assumptions, and simulating the proposed rating environment. A restriction in any of these is felt first by actuarial staff. It limits the ability to perform dislocation analysis, flesh out �what if� scenarios, and drill-down into the re-rated Book of Business.
�Ultimately, productivity problems in the P&C rating process impact the whole enterprise,� says InEdge partner and co-founder Philippe Torres. �They make it more difficult for the insurer to identify new market segments, to know when to reduce exposure in less profitable areas, or when to eliminate offerings altogether.�
According to InEdge, the top limitations to the P&C rate development process are easily identifiable. A programming-heavy environment is one. Simply making it easier to get at data and develop rates with less programming would greatly improve efficiency. The rate development framework is missing a piece � the ability to test rating assumptions, or access to an analytical environment. When a piece is missing, the insurer is forced to make �educated best guesses�.
Other restrictions can include �islands of rating� in which impressive rating technologies are in place, but are not being leveraged in rate development. An incomplete set of historical data can limit the value of newer rating attributes and force extensive programming measures in support of new rating assumptions.
�With the right analytical tool we eliminate restrictions and open up new possibilities in rate-making,� says Mr. Torres. �It begins with a better view on data and visual tools for performing complex manipulations easily, without programming.�
Benefits include the simplified generation of �what if� scenarios, and more transparency in the rate-making process. Small to medium sized insurers, where staffing pressures are commonly felt, benefit via the ability to run rate development projects more frequently. The risk-rating and on-level analytics accelerator supplied by InEdge resolves inefficiencies and dovetails with rating engine functionality already in place.
For further information, see Solving the Top 5 P&C Rating Process Productivity Problems via InEdge.
InEdge is a consultancy specialized in Business Intelligence and Analytics for the insurance industry. Expert at quickly leveraging data, InEdge seamlessly and powerfully creates business advantage for its clients. Over $10.25 billion Property & Casualty direct written premiums are analyzed through solutions designed and implemented by InEdge’s experienced team. InEdge is headquartered in Montreal and has offices in New York and Toronto. Visit www.inedge.com for more information.