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August 30, 2006
The 21st century insurer: Beyond price - Successful responses to shrinking opportunities
Posted by Guest Blogger and Decisions Podcast Host, Ian Turvill.
Fair Isaac has just published an article by me about the challenges faced by insurers when individual consumers face difficult economic conditions, such as higher interest rates and gasoline prices.& (See The 21st century insurer: Beyond price - Successful responses to shrinking opportunities.)
In it, I argue that many consumers will seek to lower their cost of auto insurance, because of the increased costs that they are facing on credit card debt, home payments, and, of course, filling their cars' gas tanks.
I recommend three EDM-based strategies that insurers can use to counter this effect.& These include:
- Differentiating between those consumers who are truly price sensitive, and those who are not.& Insurers should reach out proactively to those consumers who want a better deal so that they are not poached away by other carriers.& I suggest insurers can make this distinction by relying on predictive analytics, including advanced behavioral and transaction analytics, applied to the existing portfolio of customers.
- Capturing more premiums and fees from consumers by offering a broader range of value-added services.& Such services might include broader coverages, such as rental car replacement for a vehicle that is undergoing repair, or optional services, such as roadside assistance.& I propose the use of online pre-market offer testing of different policy choices, based on principles of Experimental Design, as a way of determining to whom which offer should be made.
- Adopting alternative underwriting methods, such as "
Posted by James Taylor at August 30, 2006 11:08 AM
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