Suche senden
Hochladen
Fractal analytics elasticity based pricing
•
Als PPTX, PDF herunterladen
•
3 gefällt mir
•
1,674 views
Fractal Analytics
Folgen
Technologie
Business
Melden
Teilen
Melden
Teilen
1 von 16
Jetzt herunterladen
Empfohlen
How Innovations in Pricing Can Lead to Increased Value
How Innovations in Pricing Can Lead to Increased Value
Everest Group
Caseecon08ppt05 100301013156-phpapp02
Caseecon08ppt05 100301013156-phpapp02
aicalim
Pensioen Forum 2009, Rotterdam, 30 September 2009
Pensioen Forum 2009, Rotterdam, 30 September 2009
fvalkenburg
Competitive Market Analysis
Competitive Market Analysis
guestc9708f8
Vanguard's presentation on XXXXXXXXX at the PensionSource Fund Manager Confer...
Vanguard's presentation on XXXXXXXXX at the PensionSource Fund Manager Confer...
PensionSource
Institutional Net Lease Fund, Summary Information
Institutional Net Lease Fund, Summary Information
David Wrubel
Market Vista: Q4 2012
Market Vista: Q4 2012
Everest Group
Fix session layer_rev1
Fix session layer_rev1
Panos Stassinopoulos
Empfohlen
How Innovations in Pricing Can Lead to Increased Value
How Innovations in Pricing Can Lead to Increased Value
Everest Group
Caseecon08ppt05 100301013156-phpapp02
Caseecon08ppt05 100301013156-phpapp02
aicalim
Pensioen Forum 2009, Rotterdam, 30 September 2009
Pensioen Forum 2009, Rotterdam, 30 September 2009
fvalkenburg
Competitive Market Analysis
Competitive Market Analysis
guestc9708f8
Vanguard's presentation on XXXXXXXXX at the PensionSource Fund Manager Confer...
Vanguard's presentation on XXXXXXXXX at the PensionSource Fund Manager Confer...
PensionSource
Institutional Net Lease Fund, Summary Information
Institutional Net Lease Fund, Summary Information
David Wrubel
Market Vista: Q4 2012
Market Vista: Q4 2012
Everest Group
Fix session layer_rev1
Fix session layer_rev1
Panos Stassinopoulos
Deloitte vendavo sept 2010 - outcome based approach
Deloitte vendavo sept 2010 - outcome based approach
Theo Slaats
UFI Operations Focus Meeting - Paris 2010 - Raul Sanchez
UFI Operations Focus Meeting - Paris 2010 - Raul Sanchez
UFI, The Global Association of the Exhibition Industry
How To Develop a Value Proposition That SELLS
How To Develop a Value Proposition That SELLS
LeveragePoint Innovations
Competitive Market Analysis
Competitive Market Analysis
cwhurst
Pricing strategy impacts
Pricing strategy impacts
InfraRisk
The Valuable Paradox of Uncertainty
The Valuable Paradox of Uncertainty
Robert Brown
Pps Dmrtp G Chawla V F
Pps Dmrtp G Chawla V F
chawlagagan
Sm7 ch03 positioning
Sm7 ch03 positioning
nurwaida
Va G Mx B Pricing 5 16 09
Va G Mx B Pricing 5 16 09
guest4823993
Va G Mx B Pricing 5 16 09
Va G Mx B Pricing 5 16 09
Frank Zhang
4A’s Transformation 2013 - March 10 - MPF - Deloitte - Scott Lippstreu
4A’s Transformation 2013 - March 10 - MPF - Deloitte - Scott Lippstreu
American Association of Advertising Agencies
Successful Partnerships in Microinsurance
Successful Partnerships in Microinsurance
MABSIV
mining paper
mining paper
rakesh7923
Corporate Hedging of Bitumen
Corporate Hedging of Bitumen
Frank Albrecht
Relative Valuation: Business Valuation Article
Relative Valuation: Business Valuation Article
Corporate Professionals
Chemical Supply Chain
Chemical Supply Chain
NatashaS7
KSS Retail: The Evolution of Retail Pricing
KSS Retail: The Evolution of Retail Pricing
KSSretail
Consumption chain
Consumption chain
Yellowbird Marketing Solutions
Porter genericstrategies
Porter genericstrategies
farh82
Price Optimization for Warranties
Price Optimization for Warranties
guestc9708f8
Partners Life - Insurer Innovation Award 2024
Partners Life - Insurer Innovation Award 2024
The Digital Insurer
Histor y of HAM Radio presentation slide
Histor y of HAM Radio presentation slide
vu2urc
Weitere ähnliche Inhalte
Ähnlich wie Fractal analytics elasticity based pricing
Deloitte vendavo sept 2010 - outcome based approach
Deloitte vendavo sept 2010 - outcome based approach
Theo Slaats
UFI Operations Focus Meeting - Paris 2010 - Raul Sanchez
UFI Operations Focus Meeting - Paris 2010 - Raul Sanchez
UFI, The Global Association of the Exhibition Industry
How To Develop a Value Proposition That SELLS
How To Develop a Value Proposition That SELLS
LeveragePoint Innovations
Competitive Market Analysis
Competitive Market Analysis
cwhurst
Pricing strategy impacts
Pricing strategy impacts
InfraRisk
The Valuable Paradox of Uncertainty
The Valuable Paradox of Uncertainty
Robert Brown
Pps Dmrtp G Chawla V F
Pps Dmrtp G Chawla V F
chawlagagan
Sm7 ch03 positioning
Sm7 ch03 positioning
nurwaida
Va G Mx B Pricing 5 16 09
Va G Mx B Pricing 5 16 09
guest4823993
Va G Mx B Pricing 5 16 09
Va G Mx B Pricing 5 16 09
Frank Zhang
4A’s Transformation 2013 - March 10 - MPF - Deloitte - Scott Lippstreu
4A’s Transformation 2013 - March 10 - MPF - Deloitte - Scott Lippstreu
American Association of Advertising Agencies
Successful Partnerships in Microinsurance
Successful Partnerships in Microinsurance
MABSIV
mining paper
mining paper
rakesh7923
Corporate Hedging of Bitumen
Corporate Hedging of Bitumen
Frank Albrecht
Relative Valuation: Business Valuation Article
Relative Valuation: Business Valuation Article
Corporate Professionals
Chemical Supply Chain
Chemical Supply Chain
NatashaS7
KSS Retail: The Evolution of Retail Pricing
KSS Retail: The Evolution of Retail Pricing
KSSretail
Consumption chain
Consumption chain
Yellowbird Marketing Solutions
Porter genericstrategies
Porter genericstrategies
farh82
Price Optimization for Warranties
Price Optimization for Warranties
guestc9708f8
Ähnlich wie Fractal analytics elasticity based pricing
(20)
Deloitte vendavo sept 2010 - outcome based approach
Deloitte vendavo sept 2010 - outcome based approach
UFI Operations Focus Meeting - Paris 2010 - Raul Sanchez
UFI Operations Focus Meeting - Paris 2010 - Raul Sanchez
How To Develop a Value Proposition That SELLS
How To Develop a Value Proposition That SELLS
Competitive Market Analysis
Competitive Market Analysis
Pricing strategy impacts
Pricing strategy impacts
The Valuable Paradox of Uncertainty
The Valuable Paradox of Uncertainty
Pps Dmrtp G Chawla V F
Pps Dmrtp G Chawla V F
Sm7 ch03 positioning
Sm7 ch03 positioning
Va G Mx B Pricing 5 16 09
Va G Mx B Pricing 5 16 09
Va G Mx B Pricing 5 16 09
Va G Mx B Pricing 5 16 09
4A’s Transformation 2013 - March 10 - MPF - Deloitte - Scott Lippstreu
4A’s Transformation 2013 - March 10 - MPF - Deloitte - Scott Lippstreu
Successful Partnerships in Microinsurance
Successful Partnerships in Microinsurance
mining paper
mining paper
Corporate Hedging of Bitumen
Corporate Hedging of Bitumen
Relative Valuation: Business Valuation Article
Relative Valuation: Business Valuation Article
Chemical Supply Chain
Chemical Supply Chain
KSS Retail: The Evolution of Retail Pricing
KSS Retail: The Evolution of Retail Pricing
Consumption chain
Consumption chain
Porter genericstrategies
Porter genericstrategies
Price Optimization for Warranties
Price Optimization for Warranties
Kürzlich hochgeladen
Partners Life - Insurer Innovation Award 2024
Partners Life - Insurer Innovation Award 2024
The Digital Insurer
Histor y of HAM Radio presentation slide
Histor y of HAM Radio presentation slide
vu2urc
Data Cloud, More than a CDP by Matt Robison
Data Cloud, More than a CDP by Matt Robison
Anna Loughnan Colquhoun
presentation ICT roal in 21st century education
presentation ICT roal in 21st century education
jfdjdjcjdnsjd
Tech Trends Report 2024 Future Today Institute.pdf
Tech Trends Report 2024 Future Today Institute.pdf
hans926745
08448380779 Call Girls In Diplomatic Enclave Women Seeking Men
08448380779 Call Girls In Diplomatic Enclave Women Seeking Men
Delhi Call girls
GenCyber Cyber Security Day Presentation
GenCyber Cyber Security Day Presentation
Michael W. Hawkins
2024: Domino Containers - The Next Step. News from the Domino Container commu...
2024: Domino Containers - The Next Step. News from the Domino Container commu...
Martijn de Jong
Axa Assurance Maroc - Insurer Innovation Award 2024
Axa Assurance Maroc - Insurer Innovation Award 2024
The Digital Insurer
From Event to Action: Accelerate Your Decision Making with Real-Time Automation
From Event to Action: Accelerate Your Decision Making with Real-Time Automation
Safe Software
08448380779 Call Girls In Friends Colony Women Seeking Men
08448380779 Call Girls In Friends Colony Women Seeking Men
Delhi Call girls
Presentation on how to chat with PDF using ChatGPT code interpreter
Presentation on how to chat with PDF using ChatGPT code interpreter
naman860154
Mastering MySQL Database Architecture: Deep Dive into MySQL Shell and MySQL R...
Mastering MySQL Database Architecture: Deep Dive into MySQL Shell and MySQL R...
Miguel Araújo
08448380779 Call Girls In Greater Kailash - I Women Seeking Men
08448380779 Call Girls In Greater Kailash - I Women Seeking Men
Delhi Call girls
Boost PC performance: How more available memory can improve productivity
Boost PC performance: How more available memory can improve productivity
Principled Technologies
ProductAnonymous-April2024-WinProductDiscovery-MelissaKlemke
ProductAnonymous-April2024-WinProductDiscovery-MelissaKlemke
Product Anonymous
The 7 Things I Know About Cyber Security After 25 Years | April 2024
The 7 Things I Know About Cyber Security After 25 Years | April 2024
Rafal Los
EIS-Webinar-Prompt-Knowledge-Eng-2024-04-08.pptx
EIS-Webinar-Prompt-Knowledge-Eng-2024-04-08.pptx
Earley Information Science
Driving Behavioral Change for Information Management through Data-Driven Gree...
Driving Behavioral Change for Information Management through Data-Driven Gree...
Enterprise Knowledge
Strategies for Unlocking Knowledge Management in Microsoft 365 in the Copilot...
Strategies for Unlocking Knowledge Management in Microsoft 365 in the Copilot...
Drew Madelung
Kürzlich hochgeladen
(20)
Partners Life - Insurer Innovation Award 2024
Partners Life - Insurer Innovation Award 2024
Histor y of HAM Radio presentation slide
Histor y of HAM Radio presentation slide
Data Cloud, More than a CDP by Matt Robison
Data Cloud, More than a CDP by Matt Robison
presentation ICT roal in 21st century education
presentation ICT roal in 21st century education
Tech Trends Report 2024 Future Today Institute.pdf
Tech Trends Report 2024 Future Today Institute.pdf
08448380779 Call Girls In Diplomatic Enclave Women Seeking Men
08448380779 Call Girls In Diplomatic Enclave Women Seeking Men
GenCyber Cyber Security Day Presentation
GenCyber Cyber Security Day Presentation
2024: Domino Containers - The Next Step. News from the Domino Container commu...
2024: Domino Containers - The Next Step. News from the Domino Container commu...
Axa Assurance Maroc - Insurer Innovation Award 2024
Axa Assurance Maroc - Insurer Innovation Award 2024
From Event to Action: Accelerate Your Decision Making with Real-Time Automation
From Event to Action: Accelerate Your Decision Making with Real-Time Automation
08448380779 Call Girls In Friends Colony Women Seeking Men
08448380779 Call Girls In Friends Colony Women Seeking Men
Presentation on how to chat with PDF using ChatGPT code interpreter
Presentation on how to chat with PDF using ChatGPT code interpreter
Mastering MySQL Database Architecture: Deep Dive into MySQL Shell and MySQL R...
Mastering MySQL Database Architecture: Deep Dive into MySQL Shell and MySQL R...
08448380779 Call Girls In Greater Kailash - I Women Seeking Men
08448380779 Call Girls In Greater Kailash - I Women Seeking Men
Boost PC performance: How more available memory can improve productivity
Boost PC performance: How more available memory can improve productivity
ProductAnonymous-April2024-WinProductDiscovery-MelissaKlemke
ProductAnonymous-April2024-WinProductDiscovery-MelissaKlemke
The 7 Things I Know About Cyber Security After 25 Years | April 2024
The 7 Things I Know About Cyber Security After 25 Years | April 2024
EIS-Webinar-Prompt-Knowledge-Eng-2024-04-08.pptx
EIS-Webinar-Prompt-Knowledge-Eng-2024-04-08.pptx
Driving Behavioral Change for Information Management through Data-Driven Gree...
Driving Behavioral Change for Information Management through Data-Driven Gree...
Strategies for Unlocking Knowledge Management in Microsoft 365 in the Copilot...
Strategies for Unlocking Knowledge Management in Microsoft 365 in the Copilot...
Fractal analytics elasticity based pricing
1.
®
Squeezing Price Elasticity into the Pricing Matrix By Deepak Ramanathan & Ed Combs Fractal Analytics Inc. Presented at Auto Insurance Report National Conference 2011 Confidential | Copyright © Fractal 2011 1
2.
®
Key points to be covered in the next 25 mins 1. European insurers have realized substantial benefits by using price elasticity in their pricing models 2. In the US, though European approach is prohibited, ‘intuition led’ changes motivated by price elasticity occur 3. By being a bit more scientific while incorporating elasticity we can improve performance – Without changing the rating structure – Without introducing new variables in the ROC – While maintaining ‘loss cost’ as the most important component of pricing 4. Using price elasticity, we can optimize prices while staying within the allowable band of loss cost indicated relativities Confidential | Copyright © Fractal 2011 2
3.
®
Elasticity based pricing & optimization is a well known concept in the insurance industry It is about reaching the efficiency frontier More volume / same profit Volume (GWP) More profit / same volume Loss cost based pricing Profit (1 – loss ratio) Confidential | Copyright © Fractal 2011 3
4.
®
Why is Elasticity Based Pricing important? 10% 7.5% Premium Lost Opportunity 5.3% Mth 1 Mth 6 Proposed Realized Elasticity Based Pricing has huge potential to improve both top-line and bottom-line Confidential | Copyright © Fractal 2011 4
5.
®
European insurers leverage elasticity in pricing Selective Discounts Frequent Rate Changes Discounts are offered at point of sale Prices are changed rapidly, some times purely based on elasticity multiple times in a day Price Testing Insurers experiment with prices in the marketplace to create data for elasticity UK market Regulations make it easy for insurers to leverage price elasticity Confidential | Copyright © Fractal 2011 5
6.
®
In the US, elasticity had not been widely used in the past because of… Regulatory constraints Data hurdles Two households with the same rating characteristics cannot be charged Lack of good data, inability to price test different rates The wait is over We can capture part of the gain within the regulatory framework People like us are already doing this Confidential | Copyright © Fractal 2011 6
7.
®
…But ‘intuition led’ Elasticity Based Pricing is common Aren’t factors frequently revised after meeting the sales team? Isn’t actuarially justified discount such as persistency discount overridden? Isn’t rate capping used frequently to avoid disruption? What is the rationale for such "intuition led", "common sense led” decisions? What if we could make these decisions more data driven? We often override pure loss cost in favor of more revenue Confidential | Copyright © Fractal 2011 7
8.
®
Scientific Elasticity Based Pricing requires three essential components Loss Cost Modeling Price Elasticity Cost of doing business Measures customer risk PRICING Measures customers’ Helps in segmenting reaction to price changes customers based on risk Helps realize different profit attributes margin depending on price sensitivity Future revenue potential / Lifetime value (LTV) Index for customer loyalty and cross-sell potential This helps insurers go beyond ‘cost plus’ pricing model and incorporate key customer characteristics Confidential | Copyright © Fractal 2011 8
9.
®
…And requires a lead time of up to a year Components of traditional pricing Additional components needed workbench • Policy & Quote data • Policy level elasticity data • Factors used in pricing Estimated renewal / conversion • Factors Relativities Estimated renewal premium Current • Policy level LTV data Proposed Estimated survival Indicated Estimated future cross-sell • Pricing engine • Elasticity & LTV measurement at various • Competitor data price changes Key Insights • It takes 4 to 6 months to build elasticity & LTV capabilities • It takes an additional 6 months to run a pilot and validate results Confidential | Copyright © Fractal 2011 9
10.
®
We can optimize prices by varying a limited number of rating factors using elasticity & LTV Age Limits Territory 35 – 40 years 30/50 Jacksonville Upper Confidence Upper Confidence Upper Confidence Level Level Level Selected Relativity Model Relativity Model Relativity Selected Relativity= Model Relativity Selected Relativity Lower Confidence Lower Confidence Lower Confidence Level Level Level Elasticity & LTV provide new insights about the customer . This can help us select “better” relativities Confidential | Copyright © Fractal 2011 10
11.
®
Tests show that this approach works Case Study: Simulation results from a large P & C insurer in the US US Regulatory UK Market Scenario Parameter Scenario (-10% to +10%) Average premium 0% (by design) 0% (by design) change Number of policies +0.9% +3.7% Written premium +3.5% +9.7% Loss ratio -1.0% -2.3% Better retention & better top line growth, while remaining risk neutral Confidential | Copyright © Fractal 2011 11
12.
®
The wait is over…Don’t get left behind We can capture part of the gain within the regulatory constraints Our estimate suggests companies that account for ~ 35% of the market share: Either have this capability Or in the advanced stages of developing it We expect this number to grow in the next year Other benefits include better forecasting and objective decision making Confidential | Copyright © Fractal 2011 12
13.
®
Though challenges exist, this is no rocket science Defining price elasticity No price testing The standard definition has to be Due to regulations, price testing cannot modified to include rate avoidance, etc. be used to estimate elasticity Non-linear nature Balancing elasticity and LTV with loss cost Elasticity LTV Elasticity Based Pricing is highly non- Elasticity and LTV can be first computed linear with multiple local optima at a segment level & then at a policy level Confidential | Copyright © Fractal 2011 13
14.
®
In Summary… • Optimization techniques have evolved to incorporate elasticity • Due to limited regulations and potential upside, European companies have been early adopters • US insurers are realizing the value of elasticity led optimization • While the accrued benefits may not be as high as in the European scenario, there is money to be made within regulatory constraints • It takes a year to build this capability and go to market with it Confidential | Copyright © Fractal 2011 14
15.
®
Thank You Deepak Ramanathan Ed Combs Insurance Director – Fractal Analytics Insurance Advisor – Fractal Analytics deepakr@fractalanalytics.com ed@fractalanalytics.com 323-719-4165 ed@combsconsults.com 818 706-3467 Fractal Analytics Inc. www. fractalanalytics.com Confidential | Copyright © Fractal 2011 15
16.
®
Nothing here Confidential | Copyright © Fractal 2011 16
Hinweis der Redaktion
.
Jetzt herunterladen