FCCI Insurance Group improves pricing, profitability with SAS® Analytics
SAS® brings data-driven approach to selecting and pricing commercial insurance accounts
CARY, NC (Aug. 16, 2010) – Technology is helping insurers improve profitability and operational efficiency by better understanding and servicing customers. Using SAS, the leader in business analytics, FCCI Insurance Group harvests valuable information from its data, helping underwriters select accounts and price insurance products.
Serving 14 US states with commercial property and casualty insurance, FCCI Insurance Group knew SAS could deliver required in-depth analysis based on prior success using SAS.
"Like most carriers, our individual underwriters supplement hard data with experience and anecdotal evidence for pricing and account selection," said Ned Wilson, Vice President of Treasury and Planning. "We knew our large data stores could provide meaningful insights that would help select accounts and price products to improve profitability and retain customers. The challenge is extracting, understanding, analyzing and presenting it in a useful way.''
"SAS® Enterprise Miner TM lets us analyze the data in more depth,'' said David Leblanc-Simard, Senior Vice President/Chief Actuary. Despite its power, both Leblanc-Simard and Wilson consider SAS easy to use. Wilson added, "SAS has speed, sophistication, power and a friendly user interface.''
Using SAS Enterprise Miner, Wilson and Leblanc-Simard have teamed with the underwriting group to examine existing data to create pricing and selection rules. It turns out account size matters. Certain size accounts haven't been profitable for FCCI and, in fact, cost the company money. Also, FCCI discovered sweet spots between high- and low-risk businesses that can be very profitable. Wilson says they will offer accurate size-based pricing and selection recommendations based on predictive models developed using SAS Enterprise Miner.
In addition, FCCI contracted with Dun & Bradstreet to “retro score” all policies in the company’s database. They learned that items like judgments or liens were very meaningful in predicting which companies would eventually file excessive claims.
Leblanc-Simard and Wilson have found other important relationships in their data as well. "When it comes to underwriting rules, one size does not fit all. We're developing several different underwriting models for pricing and selection that consider new versus renewal business, account size or geography,'' said Wilson. "We want this analysis to provide insights and inform – not replace – the expert judgment of our underwriters.''
The insurer anticipates 1-1.5 percent improvement in their combined ratio from choosing which businesses and customers to insure, and from pricing products appropriately.
"The better we assess risks, the better we'll be at selecting good accounts, which leads to improved profitability,'' Wilson said.
While Leblanc-Simard sees SAS bolstering the company's bottom line, he also sees it benefiting customers. "By offering customers appropriate prices, we'll attract and retain customers that are a good match for us."
About FCCI Insurance Group
FCCI Insurance Group (FCCI) began in Sarasota, FL, in 1959 as a self-insurance fund to help its members save money on the cost of workers’ compensation insurance. Today, FCCI provides comprehensive commercial property and casualty insurance to more than 17,000 policyholders in 14 states throughout the Southeast and Midwest. FCCI wrote $471.8 million in direct written premiums in 2009 and is rated A- (Excellent) by A.M. Best. Headquartered in Sarasota, FL, FCCI has regional offices in Sarasota, FL, Duluth, GA, Carmel, IN, and Jackson, MS, as well as a branch office in Lake Mary, FL. For more information, call 1-800-226-FCCI (3224), or visit www.fcci-group.com.
SAS is the leader in business analytics software and services, and the largest independent vendor in the business intelligence market. Through innovative solutions delivered within an integrated framework, SAS helps customers at more than 45,000 sites improve performance and deliver value by making better decisions faster. Since 1976 SAS has been giving customers around the world
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