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AUDATEX Turkey March 5 , 2012 © Copyright 2008 2012 Audatex Turkey Global Knowledge, Local Focus. Pareto Principle_The Solera Way • 80/20 Rule – 80% of the claims are generated by 20% of the population. Focus critical time on understanding large claims dynamics • 20 % of customers destroy value. Customer segmentation Cumulative contribution to value added 20% destroy value 200% 180 160 140 120 50% don’t create value 100 80 60 40 20 0% 0% 30% generate 150% of20value 40 60 80 100% Percentage of customers Good customers at risk Managing actively ‘Up or out?’ 3 Pricing cycle Adequate pricing brings profits and increased surplus. Adequate Pricing Inadequate Pricing Low surplus constrains writings; prices rise because supply cannot meet demand. Flush with surplus, competitive pressure leads to decreasing prices. Inadequate pricing leads to net losses and decreased surplus. Indequate Surplus Adequate Surplus Price optimisation process claim propensity models competitive market analysis constraints optimisation new premiums customer behaviour models customer value models 5 How do you manage your risk? Underwriter Combined Ratio Policy/Client Integrating structured data Underwriting Business Intelligence Insured Profile Customer demographics Vehicle History Vehicle Info Claims Mgt Electronic inspection Rules Check, Communication Recovery Cash settlement Recovery Close File closure Identifying risks W/O Foglight With Foglight Fleunce Business Fleunce Extreme Line Line Diff (%) Insured Sum 43,800 TL 46,500 TL 6% MOD 1,810 TL 1,765 TL -2 % Spare Part Total 1,700 TL 3,400 TL 50 % Can more be less CASE 1.- (Part replacement) Current labour rate: £30.00 per hour Spare part price: £200.00 Replacement time: 2 hours Labour Cost: 2 X £30 £60.00 Total Cost to Insurer £260.00 Parts Margin for repairer: £200 X 20% £40.00 Labour margin (Gross Profit) £60.00 X 64% £38.40 Total gross benefit for repairer £78.40 CASE 2.- (Part repair) New labour rate: £35.00 per hour Part repair time: 4 hours Total cost for insurer: 4 x £35 Insurer Saves £120.00 £140 Labour margin (Gross Profit) £140.00 X 64% Repairer Gross margin Increase of £11.20 over 14% £89.60 Penalties for Poor Data • • • • Loss of competitiveness Higher reinsurance costs Unfavourable rating agency assessments Loss of investor confidence Rewarding Robust Data Quality • • • • • • Competitive advantage Improved pricing for insurance Discounted premium for reinsurance Visible Management of Enterprise Risk Credibility with rating agencies Investor confidence Summary Timely, actionable information allows the claim to move forward more quickly and nimbly. This enables us to manage our loss ratio effectively. Forward thinking insurers will transform their underwriting approach, intergrating the valuable information gathered from claims handling.To realize this, the data is available by teaming up with the right partners. Thank You Istanbul, March 5, 2012 Çağrı AKIN Managing Director at Audatex, Turkey [email protected] Tel +90 (0) 216 554 65 00 www.autoonline.com.tr