Modelling of Technical Cost and Sales Performance
Finity undertakes modelling of claims cost and sales performance using Generalised Linear Models (GLMs). We use the SAS Enterprise Miner framework supplemented with Machine Learning techniques.
Using this approach, Finity is able to find complex relationships within the data which more limited or traditional approaches may miss. In our view, highly accurate predictive models are required as an important input to pricing decisions, in order to build sustainable competitive advantage in today’s highly competitive marketplace.
Finity has also developed a range of tools which significantly improve the efficiency of the modelling process. This enables us to complete the modelling cost effectively. Two specific areas where Finity has developed value-added techniques and processes include vehicle grading and geographic rating.
Vehicle Grading
Vehicle risk assessment and pricing can be one of the most challenging aspects of the rate review process, particularly for small to medium sized insurers. Finity has devised an approach to vehicle risk modelling which makes use of external data to pool the experience of vehicles with similar characteristics as part of the risk assessment process. We combine a vehicle risk assessment based on the vehicle characteristics, calibrated to the insurer’s own experience, with the experience of individual vehicle models to form a credible individual vehicle risk assessment. This can be used as a key input to pricing decisions at the individual vehicle level.
Geographic Rating
The geographic risk assessment component of a rate review is also a challenging dimension to get right. For the non-weather related perils, Finity’s approach is to combine external geo-demographic and (where possible) positioning data at the individual address level with the client’s own experience to uncover the true drivers of the geographic risk differentials. We then use a credibility based smoothing approach, incorporating a spatial component, to form a final risk assessment of an individual geographic unit. Finity uses advanced mapping software with point of interest overlays as well as a customised software solution as part of the process.
Contact us
 |
Nelson Henwood+61 2 8252 3460 Scan the tag for Nelson’s vCard |
 |
