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Business Advisory

Advanced actuarial and statistical methods in business applications: product strategies, customer value management, investment and reinsurance optimization, effective claim settlement.

 

Customer value management

At present, insurers are often found difficult to write new business with similar profit margins as in the past. Consequently, they are motivated to find profits elsewhere as the room for increasing profits from new products/clients might be limited.

We can help to our clients with definition how to measure the client, agent, policy value and how to find an appropriate set of few key value drivers for monitoring and evaluation this value. We do this by the use of advanced statistical techniques. Subsequently, we help our clients how to use these results for setting up incentives for sales force and how to exploit the value of valuable client segments.

 

Competitor survey

In the current competing environment it is extremely difficult to create products which equally satisfy the needs of client, the insurance company and the distribution network. Companies offering unique products which bring value to all stakeholders are the winners of this game. In response to this, we offer to our clients a customized benchmarking tool, which compares the life insurance products available on the market in quantitative terms such as the structure of benefits, risks covered, pricing of individual risks, expense loadings, etc. – all based on the data available to the public analysed by our advanced pricing and statistical know how. This can be used as an input to the product design process to create distinctive products, which exploit hidden opportunities on the market and react effectively to client needs.

 

Optimum product mix

Profitability of insurance products is affected by the success in matching the offered products with client need. Obviously, this further depends on ability of the sales network to access the prospective clients and the willingness and ability to promote the product offered.

By analysis of the product portfolio, current and prospective client base and structure of the distribution network, we can help to our clients in developing tailor made products for given market segments and with optimization of the incentive schemes for distribution channels in order to produce desired new business. We can also help with alignment of the product development strategy to a broader sense risk appetite of the company and profitability targets.

 

Effective claim settlement

Claim experience is one of the most important factors affecting customer satisfaction in the insurance business. At the same time, policyholders usually assess the quality of the claim settlement process primarily by speed and by the adequacy of the payment. Insurance companies need to find the adequate balance between this client need and their own interest in keeping the claims at acceptable level.

We can help our clients with review of the claim settlement process in order to identify improvement opportunities (elimination of inefficiencies in the organizational setup, overpayments, payments in error, etc.). We can also prepare a benchmarking against other market players which show the relative position of our client against competitors. 

Nevertheless, we see bigger potential in optimization of the settlement process by combining legal aspects and the actuarial view. By the use of our prospective modelling tools we can identify model cases which will lead to early identification of potential fraud and litigation and to assess these to more experienced adjusters.

 

Reinsurance optimization

Regulatory developments and changes in the financial markets are putting increased emphasis on optimum use of the available capital. Using our modelling tools and market experience we can help insurance companies in definition of the optimum reinsurance strategy, which will reflect the given risk appetite and will be implemented via definition of appropriate risk metrics. If relevant, this analysis also includes the definition of the optimum settlement strategy of annuity claims. This solution is based on simulation of the technical results and the related reduction in cost of capital under various reinsurance scenarios. We may provide a visualization of alternatives and what if analysis (impact on expected profits, capital, etc.) for different reinsurance programs.

 

Setting up optimum investment strategies

The recent financial crisis coupled with the evolving regulatory requirements created strong incentives to review investment practices of insurance companies and to see whether this was aligned to objectives (required return, risk tolerance limits, liquidity needs, regulatory constraints, etc.). We can help our clients with reviewing their current investment strategies and proposing alternatives, which respect the company’s liability profile, risk appetite and any applicable constraints such as tax, liquidity, regulatory limits or actions in stressed conditions. We can help both in setting up formal investment policy statements and modelling impact of different strategies.

   
 
   
Contact us

Office
t: +420 604 558 695
e: info@tools4f.com

Martin Janeček
t: +420 604 294 866
e: janecek@tools4f.com

 
 
 
 

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