Nothing can save money and secure customer satisfaction like superior claims service. Whether your claims organization is state-of-the-art or facing some challenges, the secret to improving the claims process lies within the information you already have. With the help of new data analysis techniques, you can better understand how key factors such as reporting delays, vendors, independent adjusters, attorney involvement, injury type and claimant characteristics impact your claims process.

Claims predictive modeling services include:

• Developing claims settlement value estimation models based on claim characteristics at various points of the claims process
• Creating an “early warning system” for identifying large and extraordinary claims
• Analyzing industry claims data sources to estimate the impact of law and regulation changes
• Evaluating claims service providers to determine their value
• Identifying report, contact and settlement lags to determine their effect on claim settlement values
• Developing a fraud detection system

Pinnacle helps insurers identify rating plan elements that can be more appropriately priced or added for additional risk segmentation. You can benefit from Pinnacle’s class plan analysis, which evaluates rating relativities with multivariate analysis to eliminate distributional bias in insurance pricing, regardless of the size of your company.

Pinnacle is experienced with using external data to supplement your own experience. For class plan analysis, we have used data from:

• Marshall & Swift / Boeckh (MSB)
• Highway Loss Data Institute (HLDI)
• U.S. Census Bureau
• R.L. Polk
• Dunn and Bradstreet
• TransUnion
• Choice Point
• Carfax
• Explore

Credit-based insurance scores have been extremely valuable in risk segmentation, pricing, rating and underwriting.

Using credit scores in your rating is just the first step. Optimizing your use of credit will help you develop and maintain a competitive advantage. And, since credit scores are in common use, consider giving your rating and underwriting processes another look with predictive modeling. This can answer questions including:

• How often should I reorder my credit score?
• How much do credit scores change over time? How does that impact pricing?
• Do credit scores have significant interactions with other rating characteristics?
• How is my competitor's use of credit scoring impacting my book of business? 

The traditional actuarial focus has been to price for profitability over the next six to eighteen months. However, most corporate goals include a desire for long-term profitability, which can create a disconnect between the prices charged by insurers and long-term company goals. A lifetime customer value analysis, however, develops a long-term view of customer value and determines how to best use this information to make more profitable long term decisions.

Lifetime customer value analysis includes:

• Analyzing current profitability
• Incorporating the probability of attracting, converting and renewing a risk
• Analyzing how competition effects the ability to write and retain risks
• Quantifying demand elasticity with an insurer’s information supplemented by public information
• Highlighting differences between decisions made using traditional approaches and a long-term customer value approach
• Discussing the practical considerations of implementing these concepts

A predictive modeling marketing analysis can help you more effectively use your limited resources to target potential new business. Based on marketing response and hit ratio analysis, insurers can determine:

• Which potential marketing targets are most likely to respond?
• Of those who respond, which are most likely to purchase a policy?
• How do I optimize my marketing plan to maximize profitable business?
• What are the characteristics of a customer that shops? Who is most likely to switch?
• How likely is it that a certain type of customer will respond to cross selling?

Price optimization will help you find the best premium to charge subject to a set of constraints. How does one determine what price is “best”? The answer varies by company, but is usually determined by working through the corporate goals and the traditional constraints on prices, and setting the price that best helps the company achieve its goals.

Our price optimization analysis takes into account many business considerations -- competitiveness, new business flow and expected profitability, losses and retention -- to take your pricing and profitability to the next level.
 

Pricing insurance products today has become much more sophisticated. Insurers are using many new factors to segment insurance risk in innovative ways. We can apply predictive modeling to better segment and price your risks and maintain or gain competitive advantage.

Our pricing services include:

• Identifying and processing insurer data for pricing analyses
• Identifying and introducing external data to supplement pricing plans
• Supporting new pricing plan implementation in many ways - such as internal system specifications and regulatory approvals

Pinnacle has experience in all stages of program development -- from creating a new, unique program to program conversion. This includes everything from refining existing programs to developing new programs. Pricing, coverage features, and eligibility can all play an essential part in a successful new product. Pinnacle also has experience developing program submission books for taking proposed programs to market seeking fronting carriers.

Some jurisdictions have residual market mechanisms that allow insurers to cede a portion of their book of business to a residual market. Predictive modeling enables insurers to compare their premiums with a more detailed expected loss calculation to develop more effective risk ceding rules. This analysis ensures that the least profitable risks are being ceded to the residual market, which will positively impact the bottom line.

As an insurer, you need to know more than just what it will cost to insure a risk, but whether you can write and retain it at a given price. A retention and conversion analysis determines the likelihood that an insurer can write or retain a risk based on its risk characteristics, marketplace competitiveness, marketing channels and historical price changes. With this information in hand, you can adjust risk pricing, develop targeted marketing plans and better determine long-term potential profitability.

Using external data, Pinnacle creates vehicle classification factors that replace or supplement existing model year and symbol factors. Pinnacle can help insurers develop their own vehicle classification factors so introducing new models is quick and easy.

Territories should be regularly updated or reconsidered to ensure risks are competitively priced. Thanks to the emergence of multivariate analysis and clustering and smoothing techniques, we can help you discover state-of-the-art rating territories that will challenge your competitors.

We can help you develop the most appropriate theoretical territorial set, adjust these sets for real-life constraints and review the impact upon your existing portfolio. Pinnacle can also make further adjustments based upon desired maximum rate swing constraints and provide rate filing support.

Pinnacle has developed clustering techniques for territorial analysis, which begin with data at a very refined -- typically ZIP code -- level. Then we smooth and cluster the data in an iterative process to form homogeneous rating territories. We have applied these techniques for many clients, in several states to produce rating territories that comply with any state rating restrictions. This approach can also help you design more objective and predictive territory definitions.

If your data is too sparse to have full credibility, Pinnacle can help obtain additional data to supplement your data with additional experience.

Our Geographic Information Systems analysts create territory boundary maps electronically for use in either PCArcView or MapInfo mapping software. These files allow us to identify areas where mismatch of territory definitions create either competitive advantage or competitive disadvantage.

We have also built a library of rating territory maps for auto and home. These maps have been the backbone of our competitive analysis services and are now available through our mapping services department. The maps are available on paper or in electronic format (Mapinfo, Arc/view). We will export into other formats on request. The files can also be overlaid to show comparisons between companies. If we don't have the company, line or state that you are looking for, custom mapping is available.

You may be missing competitive opportunities to better price risks at the territorial level. Pinnacle can help insurers develop state-of-the-art rating territories by applying territorial clustering and smoothing. Our process takes into account practical considerations, including regulatory legal constraints on territory definitions and impact on your existing portfolio.

Using Summit®, our territorial software, our expert actuaries can apply smoothing and clustering techniques to your experience by product, state, line of business and coverage/peril and location to develop territories on a contiguous or non-contiguous basis. Data is also available to supplement the process such that even smaller insurers can take advantage of the power of refined territory definitions.
 

Traditionally, underwriters are responsible for selecting risks consistent with company philosophy. For many insurance products, however, the line between underwriting and rating has blurred recently, as many subjective elements historically considered in underwriting are now falling into tiering or rating. Some companies also have the philosophy that since any risk can be written at the right price, no risks should be rejected.

Predictive modeling applications for underwriters include:

• Straight through processing strategy
• Targeted home/vehicle inspections
• Rules-based MVR ordering
• Book of business profitability analysis for underwriting guidelines
• Analytical review of underwriting guidelines
• Selection/rejection criteria
• Underwriting action indicators.

There is a wealth of information available from historical underwriting information, and this can be used to make the underwriting process more effective.
 

Thanks to predictive modeling and new developments in auto data, you can enjoy more accurate vehicle classifications-- regardless of your company’s size. We can also develop liability symbols to determine your company’s best approach for rating vehicles for liability coverage. You don’t have to worry about the complexities from the proliferation of vehicle makes and models by model year either. We have that covered too.