Forecasting shows Ohio Mutual the impact of rate increases on policy renewals for smarter pricing decisions.
What happens when you can forecast how a rate change will affect renewals at both the agent and policyholder level? Using SAS Analytics, Ohio Mutual Insurance Group can explore price elasticity and broaden its insurance lines with less risk. The insurer says SAS gives it the kind of analytical firepower usually reserved for much larger companies – at a very affordable price.
"We could calculate what a rate change would do to the overall book but, for instance, we couldn't determine that 10 percent of the book would see at least a 6 percent rate change or 5 percent of the book would have a 10 percent rate change,'' says Dave Grove, Vice President of Product Management.
The company began using SAS BI for Midsize Business and SAS Enterprise Guide five years ago. With just one analyst, Ohio Mutual was quickly able to forecast rate changes all the way down to the policyholder level.
"We've just recently begun looking at the walkaway price for particular policies,'' Grove says, explaining that a 5 percent increase on one type of policy could trigger much more price shopping than a similar increase to another policy or individual policyholder.
With better insight into price sensitivity, executives can make better decisions on premium pricing. "SAS provides us with an additional layer of comfort knowing that the final rates we select will not be completely out of line,'' Grove says, adding that they can notify agents ahead of time on premium increases.
"IT loves not having to get involved,'' says Grove, adding that he is often surprised to hear conference speakers discuss the importance of doing what his company is doing, and then in the next breath talk about the four- to six-month-long effort it will take to get the information.
"I sit there thinking, 'We can do this in a week.' Having SAS gives us the capability to access the data, do this type of analysis and minimize the time it takes,'' Grove says. "We can really do a lot with a little, which allows us to compete with companies that are significantly larger."
"There's this perception that you need a large staff of SAS experts and it costs a lot. That's not the case," Grove says. "We started with one individual, and the cost for SAS has been very affordable.''
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Ohio Mutual Insurance Group
Forecast premium increases, price new products effectively and explore price elasticity.
Tweak cost increases based on forecasted business impact, and notify agents well in advance of increases; access tp sophisticated analysis without IT support.
“"We can really do a lot with a little, which allows us to compete with companies that are significantly larger."”
Vice President, Product Management