Smarter insurance pricing with AI

The global car insurance market is a growing and fiercely competitive sector. Increasingly, it is turning to advanced digital solutions to multiply value, personalize offerings and improve customer experience. This is the case in Turkey, where leading insurer Neova Sigorta is boosting the car insurance segment of its business thanks to a modernization program that includes AI and machine learning.

Auto insurance pricing has traditionally been based on generalized linear models (GLMs). These offer predictable and easily explained estimates, but their accuracy can be limited, resulting in higher prices and lower sales.

Neova Sigorta set out to address this issue through the use of sophisticated machine learning algorithms. It selected SAS Insurance Life Cycle Accelerator, a pricing solution with AI-based premium modeling for general and life insurers, as its platform of choice. This was integrated by software and consultancy firm and SAS Partner Sade Yazilim.

“Our initial aim in introducing SAS Insurance Life Cycle Accelerator was to manage all of Neova’s models in an interconnected environment,” says Neslihan Neciboğlu, CEO of Neova Sigorta. “We then started to see the benefits of the machine learning approach in pricing premiums.”

More accurate and faster results

Unlike GLMs, machine learning algorithms do not make assumptions of linearity between data. They consider multiple variables that define customer behavior and can therefore extract more granular patterns and produce much more accurate – and faster – results.

Machine learning-based pricing allows Neova Sigorta to offer fairer premiums based on customers’ specific needs, says Neciboğlu. In particular, it helps the company better capture segments that its traditional tariff structure could not differentiate sufficiently, enabling more accurate and personalized pricing.

“SAS Insurance Life Cycle Accelerator is designed to blend GLMs with explainable machine learning, giving insurers the best of both worlds,” says Franklin Manchester, Global Insurance Strategic Advisor at SAS. “Ultimately, it makes machine learning-enhanced pricing not only more accurate, but governed, explainable and deployable – something pure machine learning tools can’t offer.”

As a result of this new machine learning-based premium-pricing solution, Neova Sigorta has seen a significant improvement in its hit ratio, with a higher proportion of customers accepting proposals

Using AI to drive competitive advantage

Throughout its business, Neova Sigorta views AI not just as a tool for improving efficiency, but as a core driver of competitive advantage and risk management. “We have moved beyond standard applications into sophisticated, predictive territories,” Neciboğlu points out.

The changes include the centralization of the company’s analytical infrastructure, using SAS Insurance Life Cycle Accelerator. Neova Sigorta can now run advanced machine learning models for tariff management and agency segmentation and can use these models to determine the most reasonable premiums based on precise customer needs.

Neova Sigorta is also extending its use of AI to the assets side of its balance sheet and regulatory frameworks. “Our investment in master data management and data quality under our AI governance model ensures that the granular data required for IFRS 17 calculations is accurate and accessible,” says Neciboğlu.

“We expect to achieve a more robust operating model, where financial risks are predicted, rather than reacted to. This supports our strategic goal of sustainable, profitable growth and maintaining a strong equity structure.”

“Many of our key insurance partners are now using these accounting standards to drive their business and unlock strategic value beyond compliance,” explains Anselmo Marmonti, Vice President of Risk, Fraud and Compliance Solutions at SAS. “They’re able to do multi-year projections, so they can really understand how to shape their portfolios and where the future profits are.”

No longer just an IT project

Neciboğlu expects AI and machine learning to play a growing role in Neova Sigorta’s operations in the years ahead. The company has defined a clear strategy to advance its AI maturity level within the next three years, bringing a shift to broader implementation and embedding AI into more core processes.

“AI is no longer just an IT project; it is aligned with our main business strategy,” says Neciboğlu. Neova Sigorta has identified around 60 AI use cases, ranging from generative AI for chatbots and report generation to computer vision for damage assessment. It intends to roll out AI across the company, ensuring that all business units, from claims to HR, actively use AI tools to achieve operational excellence.

“Ultimately,” concludes Neciboğlu, “we aim to transform Neova into a global insurance brand where technology and human expertise merge to provide the fastest, most fair and most personalized experience for our customers.”