SAS® helps FCCI bring a data-driven approach to pricing commercial insurance
At FCCI Insurance Group, SAS Analytics are providing underwriters with a new solution to help them select accounts and price the company’s insurance products. The Sarasota, FL-based company expects to see a 1 to 1.5 percentage point improvement in their combined ratio from its analytical approach.
FCCI Insurance Group writes commercial insurance in 14 US states. The company, with $1.7 billion in assets, is focused on gradually expanding its business to additional states. Like most insurers, FCCI has a tremendous amount of data. But Ned Wilson, Vice President of Treasury and Planning, felt the company could learn more from this data.
“While there are other analytical tools that are simpler, SAS Enterprise Miner lets us analyze the data in more depth,’’ says David Leblanc-Simard, Chief Actuary and Senior Vice President. Nonetheless, both Leblanc-Simard and Wilson consider the solution easy to use. Wilson added, “SAS has speed, sophistication, power and a friendly user interface.’’
Developing an analytical process
Wilson and Leblanc-Simard have worked as a team with underwriting, looking at existing data to create some pricing rules based on analysis with SAS. So far the company has discovered:
Leblanc-Simard and Wilson say they have found other important relationships in their data that they are not yet prepared to share with industry peers. “We’re discovering when it comes to underwriting rules that one size does not fit all. We’re going to end up with different sets of underwriting models for pricing and selection based on whether it is new or renewal business, account size or geography,’’ Wilson says, adding this caveat: “We want this analysis to inform – not replace – the expert judgment of our underwriters. There will be times when the models simply say that we don’t yet know enough to underwrite an account, suggesting that a loss control visit or supplemental information may be needed.’’
FCCI expects that the analysis will eventually yield a 1 to 1.5 percentage point improvement in their combined ratio to the business. “The better we can assess the risks, the better we’ll be at selecting good accounts, and that will lead to be being more profitable,’’ Wilson says.
And while Leblanc-Simard wants to use SAS to bolster the company’s bottom line, he thinks it will also benefit customers. “I think we’ll be able to offer customers appropriate prices, and we’ll attract customers that are a good match for us.”
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David Leblanc-Simard, Chief Actuary, Senior Vice President
FCCI Insurance Group
Replace intuition and enhance general industry guidance with a data-driven approach to selecting and pricing accounts.
FCCI anticipates a 1 to 1.5 percentage point improvement in their combined ratio from being able to choose which businesses and customers to insure, and from pricing products appropriately.
“SAS has speed, sophistication and power.”
Vice President, Treasury and Planning