“What does it take to replace a rating engine? I always give the most famous answer every consultant gives: ‘it depends’.”
Few pieces of insurance technology are more operationally critical, more embedded in everyday workflows, or “stickier” than a rating engine. The rating engine drives pricing, customer acquisition, customer retention, revenue, and profitability, making it the “beating heart” of the organization.
Tag-teaming on this weighty topic are Harrison Jones, Senior Manager of Actuarial & Insurance Solutions at Deloitte, and Steven Caluori, AVP of Pricing at The Co-operators.
Harrison has spent his career in both actuarial and data science roles. His primary focus is on providing specialist support in P&C insurance, most notably pricing strategy and implementation, including co-leading several Earnix implementation and design phase projects for large Canadian insurers.
As he puts it, on the reward side of the equation, “In our experience, even a small improvement in loss ratio performance (e.g., 1-2% decrease) would justify the business case for an integrated rating engine. More realistically, a modest improvement (e.g., 3-4% decrease) yields significant bottom-line performance increases.” With a rating engine upgrade taking mere months with Earnix, instead of years with other vendors, the transition is well worth the effort.
Steven Caluori addresses some of the overarching and practical aspects of rating engine replacement. With Co-operators already using Earnix for modeling, the objective was to extend the Earnix implementation to also incorporate analytics and rating, an “all in one solution”. As Steven describes it, “we wanted to take an enterprise approach. We know we want Earnix to be the rating engine for all the sister companies, for all products. We looked at it as one Co-operators solution, not a disparate set of individual product or company implementations.”
Steven has spent his career in various analytics roles at P&C insurers in Canada. His experience spans all aspects of the predictive modeling lifecycle from underwriting data to operationalization and monitoring. He co-led the pricing design and implementation for Canada’s first fully on-line P&C insurance experience, and is now the Program Owner of the Earnix transformation project at Co-operators.
This session covers the full lifecycle of an Earnix project, and you’ll want to track it for yourself. Watch the presentation to follow from design through implementation and on to long-term optimization.