The pace of business and the pressure of market change are substantial challenges for insurers. The need to be responsive and provide fast pricing is critical. In an era when other industries such as travel , have platforms that enable them to provide pricing information within seconds, customers now expect immediate responses. For hard-pressed intermediated insurers, Insurer Hosted Pricing (IHP) could be the answer.
IHP provides insurers with the ability to centralise their rates and determine how they want different channels / schemes etc to be priced without the need for distribution or complicated IT oriented change promotion. Each quote request, whether from a software house, direct website or aggregator, is translated to native IHP format for use throughout IHP and the insurer rating tool (often polaris). The quote is then rated according to the insurer’s individual requirements – this could include a call to third party data enrichment providers (such as Experian) or other internal enrichment before being passed to the rating tool for premium calculation. The rate is then translated back into its origin format and passed back to the origin channel.
Those organisations that invest in an IHP platform will be able to make changes in seconds that are effective in minutes. With IHP at their fingertips, could a new age be dawning for insurers and will underwriters finally be able to deliver with the shackles off?
Whilst direct insurers already have some flexibility in changing rates and identifying fraud, they are still only scraping the surface of what is achievable with an IHP solution, not to mention splitting insurers who have both direct and indirect arms down the middle in terms of strategy and long term planning.
Building a true understanding of customer value
Customer behavioural analysis will really make an impact when data is pooled centrally from all channels to market. Imagine what could be achieved with a centralised, total customer view including all quotes, new business, MTA’s, renewals , claims details etc. This kind of data is ready to be used now and can be leveraged by experts in business areas beyond pricing.
Knowledge is power - reducing application fraud
Even when a customer purchases a policy, how much does the insurer really know about the person(s) they are insuring? In a business where avoiding risk is paramount, not only do some insurers not know who they have covered, they have no means of finding out. As a result, up to 20% of bound policies have to be cancelled and many motor books run at more than 90% loss ratio - yet the tools needed to avoid this are all available now. Calls to enrichment providers for additional data are all available with IHP at point of quote, not to mention the ability to detect quote manipulation and derive hotlists based on analysis of big data quote stores.
Given the benefits, now is the time for insurers adopt IHP, enabling them to underwrite with confidence, write more profitable business, and most importantly, prepare for the future.