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Home Case Study: Loss Cost Prediction to Reduce Non-Weather Water Losses

Home Case Study: Loss Cost Prediction to Reduce Non-Weather Water Losses

Preeti Sampath
October 22, 2023
Hands of a man cradling image of house to protect

Pinpoint helped reduce Loss Ratio by 4 points during pre-application

Client: National Home Insurance Carrier
Line of Business: Home Insurance
Number of Policies: ~150,000
Average Individual Premium: $1,291

A national home insurance carrier partnered with Pinpoint to receive Loss Cost 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.

plumbing pipe in home wall showing a leak

Loss Cost Prediction Results

Achieved a 4x Loss Ratio (LR) Spread

The client generated custom non-cat loss cost predictions by simply uploading a file into Pinpoint’s fully-automated platform. The highest decile of Pinpoint’s loss cost predictions had an actual LR of 20.5%; the lowest decile had an actual LR of 5.4%.

Predicted a 4x Loss Cost Spread

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

The lowest segment had an actual non-cat loss cost of only $65, and the highest had $241. Like the LRs, this 4x spread is available prior to eligibility, with only a prospect’s name and address.

Unlocked Loss Ratio of 4 Percentage Points

Pinpoint’s ROI Calculator revealed a loss ratio reduction of 3.93 points in the first year, which was independently validated by the client. For a book this size, this translates into $35M, with a projected 8-figure savings over a three-year period.
Homeowners Predict Non-Weather Water Losses Loss Predictions lift chart

ROI Calculator Results

Result 1

The insurer’s one-year loss ratio impact using Pinpoint’s prediction estimated a 3.93 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 $35 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.

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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