Using Analytics Beyond Price Optimisation – Towers Perrin
Article Synopsis :
Price optimization – the use of mathematical analysis to determine how customers will respond to different prices for products and services through different channels – is catching on big time with carriers as well as brokers.
In the report “Using Analytics beyond Price Optimisation” Francisco Gómez-Alvado from Towers Perrin and Marcus Looft from Earnix suggest how firms that have invested in price optimisation and built impressive analytical infrastructures can utilize these digital assets to solve emerging business problems other than pricing. Though the report focuses on European markets, its applicability is global.
The report is broadly organized across four categories:
- Cross selling
- Migrating between tariffs
- MIS reporting
Real-life business cases are shared drilling down into examples of how price optimization assets can be deployed to achieve results in the following areas:
- Save-the-sale interactions (discounts, negotiations)
- Proactive management of renewals
- Cross-sell / up-sell campaign management
- Migration between tariffs
- Channel development for insurers and brokers
- Assisting manual underwriting & sales for non-standard risks
- Calibration of real time pricing rules engines
- MIS reporting and KPIs
Price Optimization tools enable on-the-fly adjustment of processes for improved business performance via a methodological approach guaranteeing operational feasibility. Data availability and clearly defined business processes are required – both of which tend to be limiting factors for insurers.
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Digital Insurer's CommentsData is widely viewed as a key asset and core driver of growth across the insurance industry.
Beyond transactions, data is only valuable to the extent it can be analysed. Inherently dumb, data is only as smart as the questions one asks of it. So it’s not data, but a facility with data that matters.
Insurers that invest aggressively in data analysis capabilities in one area (e.g. price optimization) find collateral returns in other areas (e.g. regulatory, MIS). As such, ROI on these capabilities tend to be exponential rather than linear. For insurers in the digital age, a facility with data is every bit as important as a facility with numbers.
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