The dawning of a new year is always a good time to take stock, reflect on what’s happened the year before, and to look forward to what might happen next.
I’m often asked by customers, industry observers, and the Earnix team what I think 2024 has in store for us. So let me dust off the crystal ball and make a few predictions.
But First…
As a younger man, prior to receiving my PhD from the University of Pennsylvania, I intended to return to Israel and teach economics at Bar-Ilan University. Instead, I spent a few years in the consulting world, at Anderson and Deloitte (Deloitte and Touche at the time). Detour Number One.
Then I met our founder, Sammy Krikler, who started Earnix to apply analytics for financial institutions to harness their customer data, make optimal business decisions, and improve their performance.
The rest, as they say, is history. Happily, that second detour led me to where I find myself today.
Historical Perspective – Where We Stand Today
Much has changed over that nearly 20-year period to arrive where Earnix is today, as the global leader in pricing and rating solutions for insurance and banking.
Initialy, insurance carriers were focused on pricing through a cost-plus approach, hoping to compete by focusing on properly estimating actuarial costs and keeping operational costs in line, and then layering on a respectable and predictable margin.
One of our early insights was that this approach made sense to some degree, and was fertile ground for analytical rigor, but that insurers also needed to pay more attention to the top line, and make revenue generation a priority as well.
Which brings into play consumer behavior and competition, opening additional territory for analytics.
We began to look at consumer behavioral models – how will customers and prospects respond to changes in rates and offers? They really don’t understand risks, even the ones that they’re close to, and how they affect the policies insurers propose to write. And they certainly don’t care much about whether carriers meet their business objectives or not (unless they also happen to be shareholders).
Then we realized that pricing is much more like a “team sport,” in need of more collaboration.
Pricing involves actuarial, underwriting, product management, IT professionals, senior executives, sales and marketing, regulatory and compliance – pricing and rating cuts across all those stakeholder functions, all of which have their own objectives and KPIs. And all with established policies and procedures that need to be accommodated operationally to actually put pricing in front of customers and close business.
Now this was something we could really sink our teeth into. Huge numbers of variables, some of which may matter and some of which would turn out not to. An ever-increasing level of sophistication that requires balancing the needs of all those stakeholders. Plus, the effects of economic ups and downs, business cycles, and inflation.
Throw in the demands of pricing and rating in real time, to deploy seamlessly in the cloud, addressing regulatory requirements, the influence of Insurtechs, mergers that have created mega-carriers, an increasing focus on things like climate change, and that’s where we stand today.
Complex and exciting, to say the least.