Product development and pricing: Insurance — Non-life

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At Milliman we are expert at implementing advanced ratemaking techniques within non-life products with the goal of creating more sophisticated pricing models. We offer global experience in the non-life sector, coupled with up-close insight into the developing non-life markets of Central and Eastern Europe from consultants based in Warsaw, Bucharest, and other major European capitals.

Our consultants understand how to work with the policy data commonly found in CEE countries, whether the data quality is high or low, or only covers a limited timeframe. Our experts can calibrate models that take these challenges into account, enabling the use of advanced pricing and classification methods where data quality is adequate, tempered by analytical conclusions where data quality is poor.

Using greater levels of detail to classify new and existing customers enables our clients to identify classes with higher and lower levels of expected profitability. This insight can improve targeted growth strategies, alignment of growth incentives, and bottom-line results. Our consultants have extensive experience helping companies expand their internal use of such modeling techniques to other lines of business, as the data allows. This technique, known as predictive modeling, is gaining popularity among insurance writers because it can guide better decisions in pricing, underwriting, marketing, and claims administration.

Experts in predictive modeling

Our consultants are adept at using an array of techniques to predict which types of policyholders are at higher risk of incurring future claims. With respect to motor insurance, for example, we have experience in assessing the demonstrable predictive power of variables in individual policyholders' risk profiles, as well as variables available from external sources—beyond obvious variables such as territory, make/model of auto, and recent driving record.

Milliman can help clients design and implement predictive modeling solutions based on either open-source freeware or commercially available software. We do not simply provide a pricing solution or a piece of software—we provide insight into the application of predictive modeling techniques to all decision-making processes in your organization.

Insurers that are already using innovative pricing techniques such as generalized linear modeling can benefit from our assistance in evaluating the effectiveness of their current methods. Our expert team can enhance the current set of validation tests, improve data quality, and analyse the effectiveness of incorporating additional variables into the model, in order to improve the robustness of your data set.

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