Auto Case Study: Loss Cost Prediction to Optimize Growth

Pinpoint helped reduce Loss Ratio by 4.6 points by focusing on Individual Drivers

Client: National Auto Carrier
Line of Business: Auto Insurance
Number of Policies: 80,000
Average Premium: $1,500

Challenges for Auto Insurer: A national auto insurer partnered with Pinpoint on generating Loss Cost predictions to better understand the profitability on individual drivers and identify where they could focus their marketing and digital lead strategy to target their best possible customers.

Results

Identified most and least profitable customer segments

Pinpoint’s platform generated custom predictions with the riskiest segment and highest loss ratio better than the client’s baseline pricing. The customers in the highest 5% of Loss Cost predictions had an actual Loss Ratio that was 1.6x higher than average; the lowest 5% of Loss Cost predictions had an actual LR 1.3x lower than average.

Predicted 4.5x loss cost lift on client’s portfolio

Pinpoint’s Loss Cost Prediction, available at the top of the funnel with only a name and address, identified the lowest-cost insureds with an actual Loss Cost of $264; the highest-cost predicted segment had an actual Loss Cost of $1,177 with a top/bottom spread of 4.5x. (see lift chart below.)

Unlocked loss ratio of over 5 percentage points

Pinpoint’s ROI Calculator revealed a Loss Ratio reduction of 4.61 points over the first year. This translated into over $5 million, even though this book of 80,000 insureds was projected to shrink by 7% over this time period.

Result 1

The carrier’s year-one loss ratio impact using Pinpoint’s prediction estimated a 4.61 point loss ratio improvement with a total loss ratio improvement of 7.37 points after the third year.

Result 2

The client saw a 1st-year ROI of over $5M and a total 3-year ROI of over $19M for their carrier’s auto-book of business using Pinpoint Loss Predictions.

Our ROI calculator incorporates the predictive model’s lift by decile to project how new insights can prioritize actions to align with the carrier’s goals of profitable growth.

Why Work with Pinpoint?

Pinpoint’s lift chart allows the carrier to identify drivers with an exceptionally high loss ratio for whom they do not have an adequate rate. This early prediction, available as soon as they have someone’s name and address, helps the carrier flag an alternate application journey for that potential insured. Pinpoint’s Loss Predictions can help unlock a new source of intelligence for auto carriers to fast-track their profitable growth.

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