Combining data from various sources: premiums, claims, claim reserves, administrative costs, as well as reinsurance figures Profitability module offers highly powerful analysis of profitability result split by:
- financial & underwriting year (quarter),
- product risks (e.g. material damage vs. person injury for MTPL),
- structured claim event place,
- risk parameters (e.g. region, customer and object insured characteristics),
- other useful slices (e.g. sales channel, salesman, broker, unit, new / renew policy indicator, duration of policy, claim handler).
Depending on availability of market capacity statistics (e.g. number of vehicles) and its particularity Profitability module may provide extended suggestions: e.g. how many potential customers will be impacted by the decision to increase prices (what-if analysis or scenario testing).
Using Profitability module top management will:
- review profitability of overall product or main segments (assess achievement of profitability targets);
- look for segments with low loss ratio and large expansion possibilities;
- assess quality of the predictions (i.e. compare reserves estimated versus real claim flow);
- identify high level bottle necks (e.g. increased average claim payment, decreased claim frequency for portfolio or segment);
- access profitability of strategic customers;
- receive arguments for negotiations by checking profitability of policies sold by particular broker or employee.
Using Profitability module risk underwriter will:
- assess risk profile of insurance contract portfolio
- assess adequate risk price within segments - identification of under priced and overpriced segments;
- avoid anti-selection (decreased possibility to accept bad risks comparing with competitors) by identification and further implementation of new risk parameters;
- monitor impact of pricing changes as well as marketing campaigns on sales volume;
- drive efficient anti-fraud programme.
Using Profitability module actuary will:
- access earned / unearned premiums in any segment by 360 & 365 methods for both single or multi object policies using parameters to define reporting period;
- prepare data sets for pricing tasks;
- calculate risk based premium using prepared data sets and dedicated statistical software;
- develop measured reinsurance program and will provide collection of the arguments for negotiations with reinsurers;
- upload estimated reserves back to the system. BI Insurance engine splits reserves to individual object insured level and ensures access to full profitability of any risk driven segment;
- perform liability adequacy test.
