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European Insurers Say Importance of Pricing Significantly Increased Following Financial Crisis
Profitability is the primary driver for pricing changes according to survey results
London, UK, June 22, 2011 – Earnix, a leading provider of customer value optimisation solutions for insurers and banks, today revealed the results of an in-depth survey uncovering the latest trends and best practices in European insurance pricing processes.
Survey responses were collected from executives and pricing professionals in 11 European countries, representing general insurance carriers and brokers that offer automobile, home, and commercial insurance.
Although most European insurers escaped the financial crisis of 2008-2009 without a major downfall, a vast majority of the respondents (80%) noted the crisis has increased the importance of the insurance pricing process.
“Prior to the financial crisis, insurance companies were able to use investment gains to cover poor operational results. Once this option was off the table, insurers had to go back to basics, including making sure they optimise the premiums for every customer in order to maximise profitability and retention,” commented Barak Melnik Earnix VP for Products & Business Development. Survey results show that increasing profitability is the primary driver for insurance pricing changes, as cited by 71% the respondents.
Additional survey findings show the top challenges insurance companies encounter in the pricing process are acquiring and utilising competitive and customer data. Predicting customer behaviour was also noted as a major challenge.
Other topics covered in the survey include:
- Frequency and cycle times of rate changes
- Commonly-used rate calculation methods
- Organisational functions that take part in pricing decisions
- Systems used in the pricing process and use of pricing optimisation
- Range of rate changes and discounts in 2010
- And many more… (a total of 22 charts)
The pricing survey results are available for download on the Earnix website .