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Home Case Study: Claims Frequency Prediction to Optimize Growth

Home Case Study: Claims Frequency Prediction to Optimize Growth

Preeti Sampath
February 14, 2024
Hand holding a house up with sun shining on it

Pinpoint helped reduce Loss Ratio by 3 points to optimize profitable growth

Client: National Home Insurance Carrier
Line of Business: Home Insurance
Number of Policies: ~300,000
Average Individual Premium: $2,900

A national home insurance carrier partnered with Pinpoint to receive Loss Predictions at the top of the funnel (before the customer journey begins). Their current models are only available after the application is fully developed and all reports are ordered (e.g. Property Loss Reports, Inspections, Replacement Cost Reports, Credit, Prefill). In contrast, Pinpoint predictions are available before the application is developed, as soon as a customer name and address is known.

Insurance claim form close up with pen and eye glasses on table

Loss Prediction Claims Frequency Results

Achieved a 7x Loss Ratio (LR) Spread

The client generated custom non-cat frequency predictions by simply dropping a file into Pinpoint’s fully automated platform. The highest ventile of Pinpoint’s frequency predictions had an actual LR of 84%; the lowest ventile had an actual LR of 12%.

Predicted a 7x Claims Frequency Spread

Pinpoint’s Lift Chart also shows actual results for the frequency prediction (as well as actual severity and loss cost for those predictions).

The lowest ventile had an actual non-cat frequency of only .012, and the highest had .098. Like the LRs, this 7x spread is available prior to eligibility, with only a prospect’s name and address.

Unlocked Loss Ratio of 3 Percentage Points

Pinpoint’s ROI Calculator revealed a loss ratio reduction of 3.2 points in the first year, which was independently validated by the client. For a book this size, this translates into $19M, with a projected 8-figure savings over a three-year period.
Homeowners_Optimize Growth Loss Prediction Lift Chart

ROI Calculator Results

Result 1

The carrier’s one-year loss ratio impact using Pinpoint’s prediction estimated a 3.20 point loss ratio improvement.

Result 2

The three-year impact estimates how the shape of the risk profile of their book of business will change over time, with a projected profit improvement of $67 million.

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

Why Work with Pinpoint?

Pinpoint’s Lift Charts allow insurers to identify individuals 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 insurer flag an alternate application journey for that potential insured. Pinpoint’s Loss Predictions can help unlock a new source of intelligence for home insurers to fast-track their profitable growth.

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