Delivering transparency & flexibility in pricing: The …...Example: 2008 BMW 320i E90 Executive,...

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7 – 10 November 2010 Sheraton Mirage, Gold Coast

Delivering transparency & flexibility in pricing: The Buzz Insurance

Keith Forster and Ian FrewThe Buzz Insurance


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Presentation aims• Insight into how The Buzz delivered true

transparency and flexibility in pricing• Tips for the new internet player:

– Culture– Product design– Pricing– Technology


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Focus areas for Internet startup

CULTURE TEAM STRUCTURE

PARTNERS BUSINESSPLAN

CUSTOMERS

PRODUCTDESIGN

Pricing

Technology

How you operate as a Business

What you look like to customers

Marketing

Claims


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Culture and team structure• Get the right people

– Go hard, quick decisions, trust their judgement– Tolerant of “mistakes” but ability to recover– See the big picture but deliver detailed tasks– SME’s with strong business acumen – Willingness to step outside their “area”– Small team, flat structure– Trust b/w team + supportive leadership.– Accountability for one area, role in many


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Build partnerships, listen to customers• Partners not vendors

– understand when a decision or proposal may not be in your best interests

– committed to a long term relationship– care about the value they add

• Customer consultation and co-creation– Insight sessions– www.myinsuranceideas.com.au

• I have an older car. All I can buy is either TPPD or full cover...doesn’t seem to be a range of options available.

http://www.myinsuranceideas.com.au/�


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Articulate drivers, innovate• Important for partners, driving innovation• Communicate your KRA’s

• Simple Claims, purchasing, payments & renewal.• Simple, flexible transparent products and services• Access to help and support 24/7• Value me and reward

my loyalty

• Be brave, challenge the norm


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Pricing• Start with a clean slate

– Question some of the “truths”– Look to new sources of data– Build risk models at component level

• Result?– Learn something you didn’t know before – May take you closer to best practice– For a new brand, new segments


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Models at the component level• Provides

– Better understanding of risk drivers– Allows greater flexibility in product and pricing


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Understand what is important to the customer

• Variation in premium between insurers:– Creates a high level of suspicion that insurers

are either:• Selling them an inferior product• Not likely to live up to the promise• Ripping them off on price

Example: 2008 BMW 320i E90 Executive, Parramatta, 40 year old male, private use, no finance, no claims, new customer with insurer

Insurer 1: $2,064

Insurer 2: $1,527

Insurer 3: $1,389

The Buzz $1,386

Insurer 5: $1,339

Insurer 6: $1,086

Insurer 7: $1,018


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The Buzz… pricing transparency


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Geo-codeIf your rating engine doesn’t have this capability or your analysts aren’t developing Statistical Rates at the household level, then find someone who can.


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Selection of Systems• Play to your Strengths

– perform a sensible market review– keep “time to market” and “total cost of

ownership” high up in your selection criteria– Consider mixture of tried and true with “latest

proven” across multiple layers– Provides opportunity to allow your organisation

to test out new technologies in a lower risk environment


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Software Development • Think of your Customer’s Experience

– Whatever backend system you decide on, it is critical to have the ability to manipulate how the customer will interact

– being able to get a Quick Quote in under 60 seconds was an important feature identified by customers – ‘don’t waste my time”.


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Software Development • Build Sustainability Up Front• Need to be able to update rating engine

quickly– automated test suite– scenarios that exercise the specific changes

made– transfer new pricing from the actuarial models

to the rating engine with the minimum of human interface


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Conclusions

Culture is critical – get the

people right Small team, flat structure

Build partnerships,

eliminate vendors

Articulate the key drivers of your business

How you operate as a Business

Be brave, innovate and challenge the

norm


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Pricing strategy: start with a clean slate

Software Development – Build Sustainability

Up Front

Selection of Systems – Play to

your Strengths

What you look like to customers

Software Development –

Always think of your Customer’s Experience

model at the component level

Don’t under-estimate the

lowly risk model

Provide transparency in pricing to the

customer

GEOCODE

Delivering transparency & flexibility in pricing: The …...Example: 2008 BMW 320i E90 Executive,...

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