Pricing often occupies a paradoxical position in an insurance company: All CEOs consider this function to be at the very core of their business, growth and profitability; yet few give their technical management the means to achieve their ambitions in this area. Underwriting or distribution often take precedence in the order of priorities of business as usual.
Moreover, the pricing process is very often accused of being slow, disconnected from the threats of the market or the competition, or even opaque and incomprehensible, to the point of becoming almost anxiety-provoking: «in the end, the less we use this service, the better off we are! ». This could have been the subject of an exegesis of a Myth in itself, as pricing is so important for the growth and profitability of a company... and it is unfortunately often the case that a lack of human resources and tools is at the root of the problem that prevents pricing from fulfilling its role correctly.
The experience we have gained over the last 25 years during our numerous missions around the world has enabled us to understand and respond to the many beliefs surrounding pricing. We have selected 6 Myths around pricing, which seem strangely persistent and widespread within all types of non-life insurance companies.
"Our non-life underwriting process is truly aligned with our strategic objectives."
"Producing a tariff is the only one issue in pricing"
"The use of GLM pricing models guarantees me sustainable and profitable growth"
"The redesign of tariffs is only a case by case issue and investing in a tool is not necessary"
"Pricing is a matter of individual expertise"
"The future of Pricing is exclusively through AI and big data based models and insurtechs"
We intend to provide a brief summary below, in anticipation of your comments, suggestions, questions and challenges; each exchange will enable us all to move towards better practices.
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Chairman and CEO of ADDACTIS Group.
Executive Vice President of ADDACTIS Group,
Head of Strategy & Alliances