Triad Analytic Solutions helps insurance clients succeed with SAS®
The property and casualty insurance industry is an extremely competitive marketplace. For smaller insurance carriers, success—and survival—requires at a minimum the ability to accurately segment customers by their loss potential and then use that information to price policies competitively. In today's market, competitor pricing incorporates many forms of sophisticated analyses, based on vast amounts of clean and accurate business and customer data.
No one knows this better than Chris Hardin and Brian Scott, both managing partners at Triad Analytic Solutions. Hardin and Scott have parlayed their years of experience in the property and casualty insurance industry into a business geared toward helping small- and mid-sized carriers with limited or no dedicated statistical expertise or data management capabilities. By engaging Triad, clients gain access to the pricing and product expertise found in the analytics departments of many large carriers. Triad facilitates this by providing outsourced data integration and analytical services using SAS® Business Analytics.
Getting to the data
According to the partners, Triad's services often begin with integrating multiple databases, which typically house critical premium and loss data, to perform the required analytical work. Once the data integration work is done, the consolidated data marts and automated processes—which ensure that the data is constantly refreshed and accurate—are handed over to clients, with the training that allows clients to perform the work themselves in the future.
"In one engagement, the client was in the midst of a multi-year, seven-figure project with an IT vendor, which was designed to deliver critical data access," recounts Hardin. "In a matter of months, we were able to use SAS to build and query an interim database that yielded similar actionable analytic pricing information. We also trained the employees to maintain and use the database we created. It's a very satisfying feeling building the tools that empower a company's employees to help themselves going forward."
"It's expensive for small- and mid-sized carriers to hire full-time actuaries and statisticians, and it can be difficult to find employees with detailed knowledge about the spectrum of distribution channels and customer segments—there's no substitute for experience," adds Scott. "It's also hard to attract employees to certain locations. Our value is that we can go into these companies to assist them and train their staff to perform the work after we're gone."
"Our clients need to get their overall rating plans stabilized," says Hardin. "From there they can take analytics as far as they want to. They can move toward understanding price elasticity and retention and more advanced topics. It's a process that builds on itself – the analysis used to solve basic but elusive questions often creates the analytic foundation necessary to resolve other more complex issues as well."
"There are many small- to mid-size carriers still pricing policies based on univariate analysis," he continues. "They look at results one variable at a time and make decisions on how to treat the information. The real benefit in pricing comes from multivariate analysis, which helps you understand the impact of all the interactions between different pricing variables. We've dealt with just about every analytic data vendor in the insurance industry, so we have a pretty good idea what is out there. Typically, the proprietary carrier models that Triad builds using SAS offer more lift than the generic ones sold by certain vendors. And by maintaining their own models, carriers can save money versus purchasing one, which can nearly double the cost.
"Some of the lifetime value retention and premium modeling we've implemented has seen monoline auto renewal rate improvements of several points—a result that could easily yield a seven-figure improvement to a carrier's top line over time," he adds.
Segmenting high and low risk business
"In terms of loss ratios and profitability, we can show our clients how they can improve their performance with better segmentation and pricing," explains Scott. "With SAS, we can not only segment risk and build rating plans more accurately, but also show and quantify for our clients, using historical data, how they could have had better profitability."
So why use SAS?
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Triad Analytic Solutions
Required a solution to help insurance clients integrate disparate data sources and apply advanced analytics for improved loss ratios and profitability.
SAS Business Analytics
Allows SMB insurance carriers to quickly access the data they need in the right format; perform advanced analytics; segment risk; set appropriate rates and policy premiums; reduce loss exposure; and increase profitability.
“"In terms of loss ratios and profitability, we can show our clients how they can improve their performance ... With SAS, we can show and quantify for them, based on historical losses, how they could have had better profitability."”
Brian Scott, ACAS, MAAA