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Old 11-10-2017, 02:46 PM
Darth Mahler Darth Mahler is offline
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Default Making the case for rate segmentation

I am working on some proposals at my company for increased rate segmentation in personal auto and am wondering how I can put something together to show the benefit of improving individual rate equity, especially to people in finance or underwriting. The person requesting these wanted to use Loss Ratios, but since the filings for these are always revenue neutral, I'm not really sure how to show that in a meaningful way that wouldn't be zero. I haven't been able to clearly identify that we are being adversely affected in our retention or placement by not having the additional rate segmentation in our rating plan (I guess that means we're not behind the industry on these characteristics?). I can show differences in indications (validated over time and on holdout samples), but I'm not sure how to translate that into an effect on the bottom line. Any advice would be appreciated.
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Old 11-10-2017, 05:07 PM
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Maphisto's Sidekick Maphisto's Sidekick is offline
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The usual argument goes along these lines:

Put together a chart showing performance by segment. Point to the best bucket(s) and say, "if we don't do this, our competitors probably will, and this good business will go away; or if we do this but our competitors do not, we have an advantage at attracting this more-desirable business and sending the less-desirable business to our competitors."
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Old 11-10-2017, 05:41 PM
Darth Mahler Darth Mahler is offline
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Quote:
Originally Posted by Maphisto's Sidekick View Post
The usual argument goes along these lines:

Put together a chart showing performance by segment. Point to the best bucket(s) and say, "if we don't do this, our competitors probably will, and this good business will go away; or if we do this but our competitors do not, we have an advantage at attracting this more-desirable business and sending the less-desirable business to our competitors."
I like it. I could show how the loss ratio would deteriorate/improve based on the changing mix of business using assumptions and simulation.
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