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Competitive P&C Insurance Pricing

Navigating Customer Lifetime Value with Competitive Market Analysis

Casestudy Thumbnails Top P&C Insurer Earns Higher Profit & Revenue with Mu Sigma Collab 1

Situation

A prominent property and casualty (P&C) insurer in the U.S. faced a significant decline in both retention rates and auto insurance conversions over the past three years. Despite a rapid expansion in the direct distribution channel, this channel was underperforming in converting new business, highlighting the need for a better understanding of pricing and competitive positioning to drive growth.

Challenge

The insurer struggled to effectively evaluate price elasticity, competitive positioning, and optimal pricing strategies, impacting its ability to retain and acquire customers. Limited insights into customer lifetime value (CLTV) and price sensitivity hindered the company’s ability to stay competitive, while inefficient pricing adjustments slowed down its response to market dynamics.

Approach

Mu Sigma employed a tailored, modular optimization framework to address these pricing challenges and enable more informed strategy decisions:

  • Competitive Market Analysis: Using third-party vendor data, we conducted a comprehensive analysis to understand the client’s pricing position relative to competitors. This provided a solid foundation for recalibrating pricing strategies.
  • Advanced Statistical Modeling: Our team built multivariate models to assess price elasticity, predict customer retention, and calculate customer lifetime value (CLTV), integrating the client’s own loss model for customized precision.
  • Customizable Workbench Solution: We developed an adaptable tool workbench that empowered business users to model and analyze various pricing scenarios in 2-3 days—an 80% reduction in cycle time—without the need for coding. This solution also maximized the reuse of the client’s existing data assets.
  • Strategic Optimization: By configuring new pricing strategies within the workbench, we enabled dynamic adjustments that aligned with profit and retention goals, optimizing the insurer’s portfolio for sustained profitability.

Impact

  • 80% Reduction in Pricing Cycle Time, allowing faster response to market shifts.
  • 7% Boost in Revenue, 5% Higher Profits through optimized pricing strategies.
  • Enhanced Productivity with the code-free workbench

Business Impact

  • 7%

    Increase in Revenue 5% Boost in Profits

  • 80%

    Reduction in Pricing Cycle Time

The comprehensive competitive analysis and the ability to dynamically adjust pricing strategies have been instrumental in enhancing our market responsiveness, ultimately revitalizing our portfolio and driving growth in both retention and new business acquisition.

  • Market Research Analyst

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