Product & Pricing Management
Nowadays, successful product and pricing management requires more than just neatly calculated products. Offers must be competitive, innovative and individualized. We combine actuarial expertise with market know-how, best practices and progressive tools in order to optimize your product and service offering.
Our team consists of consultants with extensive experience within the insurance sector, former product managers, and certified actuaries (SAV/DAV). Together we cover the following areas:
The CC P&PM team consists of several consultants with an actuarial education (actuary SAV / DAV). We are trained for pricing calculations and are able to create new product models. Of course, we know all relevant product coverages in the DACH region in the branches non-life, life and health.
- Actuarial Know-how
- External Rating Factors
Not only are we conceptually strong, we also know the underlying systems by heart and we assist implementing and updating those systems. In combination with our actuarial competence we can execute statistical-mathematical analyses and models to answer business related questions in the context of product and pricing.
- Training Solutions
While the actuarial competence covers the inside-view the market competence covers the outside-view of the product/pricing development. We’re focused on P&PM for more than 10 years and know relevant competitors and their products.
- Customer Segmentation
- Multichannel Pricing
Some of our consultants formerly worked in a product management position. We combined this know-how and created a best-practice reference model for product development and pricing. This allows us to efficiently analyze and optimize processes. Additionally, we have concepts for innovative processes like behavioral pricing
Core Processes Covered
- Pricing Reference Model (product development & pricing)
- Inforce Management
- Customer Journey
- Behavioral Pricing
Methodical determination of market prices and building of a tool in order to compare these market data with internal tariffs and, based on this, carry out systematic price adjustments
Linking of a tariff calculator with an aggregator and adjustment of the product and pricing structure to the requirements of the aggregator.
Product Portfolio Management
Development of a profitability-based customer value model and derivation of measures to positively impact the portfolio.
Development of a new pricing strategy through the creation of target segments and the definition of a price/performance target for each target segment in consideration of company-wide framework conditions.
Development of a new product landscape (cover, pricing, bundles, discounts, etc.) in a greenfield approach.
Creation of a churn model (likelihood of cancellation with indicators) and development of measures in a loyalty program.
For competitive pricing, it is essential to have access to competitor data/premiums, which can be used to analyze the price position in various target segments. Often, this data is not easy to come by and has to be generated through mystery shopping or web crawling for offers.
If you are aiming to achieve coordinated and targeted pricing, it is not enough to simply focus on your own claims data (inside view). While it will guarantee actuarial coverage, it by no means ensures that a rate will also be marketable. That is why it is important to include market data in analysis and development of new rates. We see two ways of gathering this market data, which are often used in parallel.
We understand mystery shopping to be a process in which real potential customers obtain insurance quotes through agency channels/brokers. This method is time-consuming and somewhat costly. However, simultaneous to purely obtaining a quote, it also makes it possible to harvest additional information on competitors, such as the quality of advice, service and response times, or discounting behavior. Synpulse has experience in accompanying mystery shopping (provider selection, drawing up specifications, quality control, analysis of results) and can therefore actively help to shorten acquisition time while delivering high quality and timely attainment of objectives.
Web crawling specifically targets the online channel. Using the latest tools and technologies, it is possible to retrieve data from online rate calculators in any quantity, form and frequency. The high level of automation and fast repeatability of this process multiply its benefits and help to ensure that the initial script development investment is amortized quickly. Synpulse has an established team of developers for web crawling development and can also offer long-term maintenance services.
If you need competitor data for your next pricing round, take advantage of the experience Synpulse has to offer. We will be pleased to assist you in setting up mystery shopping or developing web crawling. Throughout the implementation we will accompany you with help and advice in order to safeguard quality and prevent delays from an early stage.
There is an increasing demand for actuarial pricing to include a market-based perspective. Market-based pricing presents organizations with new challenges, especially where structured data collection and the subsequent analysis and simulation are concerned. In MARKETMAP®, Synpulse has developed its own implementation concept for competitive pricing.
Pricing Component: Market Markups/Markdowns
In insurance pricing, the initial pure premium rating is increasingly often followed by a further step. This step involves taking the market dynamic into account by systematically comparing your own price position with that of the competition. Competitive pricing can be broken down into a process of four fundamental steps:
Step 1: Building Data Resources
In the first step, an analysis of the existing pricing strategy and preparations for market-based pricing are made: a status analysis is used to create customer profiles, to which market data is added (mystery shopping/web crawling) and which are examined in detail in competitive pricing.
Step 2: Identifying Attractive Segments
Attractive target customers are identified from a detailed portfolio analysis. It is also possible here to identify segments in which further growth is not wanted. Based on this segmentation, targets relating to the required price position are formulated for the purposes of a pricing strategy.
Step 3: Segment-Specific Price Positioning
In this step, the target price position is embedded in strategy. Analysis of the collected market data compared with your own rates and simulation of rate adjustments are tool-based and performed in MARKETMAP®. A tool is required here because complex insurance products contain many parameters that have to be optimized in multiple iterations based on large quantities of data.
Step 4: Institutionalization
The market-based pricing approach optimizes steering of your portfolio. Roles and functions are clearly assigned to safeguard reliable processes. A sophisticated communication concept means that sales departments have a guide to identify which are attractive customers and how the organization’s own price position compares with the competition.
The following are the main benefits generated by using MARKETMAP®
- Growth and profitability segments can be identified more easily and target achievement measured more efficiently.
- Effectiveness in rate making can be supported by facts and geared toward the pricing strategy.
- The time required for rate adjustments is shortened or optimized
Telematics & Connectivity in the Insurance Industry
Technological advances like smart watches and medical devices, networked cars and the trend of the «quantified self» are creating new areas of application for the insurance industry in telematics (telecommunication and informatics) and new opportunities to redefine the value chain.
The insurance industry has been familiar with products based on telematics for close on a decade. Applications have often been associated primarily with pricing in auto insurance. In recent years, mature technologies have also arrived on the market, which offer reliable applications in property and personal insurance. As a result, objectives such as risk selection, positioning at the customer interface, and cost optimization can be refined and novel offerings placed on the market. The potential areas of application are diverse:
- Customer interaction
- New value proposition and offerings
- Fraud detection
- Cutting the cost of insurance claim
Our experience shows that simplifying processes, added benefits, an element of fun, and a high level of convenience are key to the value proposition to the end user, whether in the context of smart homes, vehicle telematics or personal insurance telematics.
We have been supporting our clients for several years in strategy definition, development of application concepts and selection of technological solutions, and we see the implementation process through to their successful introduction.
The market knowledge we have gained in past projects is the basis on which we can help you to find the right focus in developing a telematics strategy and decide which parts of this new value creation you yourself should undertake. Our product management expertise and many years of experience in telematics enable us to develop innovative solutions to market maturity in little time.
External Tariff Factors
New External Tariff Factors
In the hotly-contested commodity market, where active risk selection plays an increasingly important role, the digitalization megatrend presents many opportunities to redefine pricing and underwriting without having to collect large amounts of data manually. New and innovative external tariff factors are a way of further enhancing risk selection, reducing the effort and expense of data acquisition, and preventing comparability.
A useful tool for differentiating your products on price and for strong underwriting are the new, digitally available external tariff factors, which offer good, direct inroads into the relevant processes, online or offline. For instance, geocodes can be used in all sectors to define risk accumulations and risk groups, while geodata help to improve prevention or pricing in property insurance. Whether behavioral data comes from your own contact with customers or from social media, it is an important component of customer interaction, which is being redefined by digitalization. We offer various concepts relating to diverse new external tariff factors and possibilities for their integration:
- Geo data (natural risks, theft and crime mapping, etc.)
- Social media data
- Behavioral data
- Customer value (marketing-oriented databases)
- Fraud detection databases
The new external tariff factors are additionally an absolute bonus for portfolios which permit no further spread in pricing or differentiation.
As far as implementation is concerned, a distinction must be made between internal (customer and behavioral data, types of operation, geocoding) and external tariff factors. Integrating external tariff factors in pricing, underwriting and sales processes is a challenging issue.
The Product and Pricing team has many years of experience in the identification of new factors and their data sources, in integration and processes.
If you are looking to prevent anti-selection and implement risk-adjusted premiums and innovative pricing, making use of new external tariff factors in the product portfolio offers a sustainable solution.
Behavioral pricing utilizes scientific, psychological information to develop an offer of products and services that elicits as positive a (buying) response in the recipient as possible. The factors influencing whether a recipient responds positively are consciousness, perception (subconscious) and their resulting judgment. Synpulse can show you targeted solutions to positively address these factors.
In relation to offer information, we see five determinants that influence buying decisions.
It is important to take on board the customer’s previous history (current information, emotional factors,…). By asking specific questions, it is possible to define the starting point and the offer process from the beginning. The simplest questions, for example whether customers know what their current premium is, help to tailor the remaining offer process to the customer.
When potential customers ask for a quote, they often already have a picture of the provider and its products in their mind. The provider’s image is important in determining whether an offer is perceived as good or bad, expensive or cheap. This customer perception can be influenced by specifically promoting certain products (known as key value items).
Insurers have calculated premiums which do not take stimulus thresholds into account. A stimulus threshold may be a rounded figure, for example. Simple optimization can ensure that premiums do not fall just above these thresholds, which improves the customer perception.
Points of Reference
All consumers have their own reference prices. A reference price is an idea of what a product or service should cost. This is very subjective and does not necessarily have to reflect reality. An offer must bear some relation to this reference if it is to be perceived as positive. We show you how to locate this point of reference and optimize your offer in line with the customer’s expectations.
Price sensitivity indicates where the range around the point of reference lies. It is a direct measure of the willingness to pay and must be incorporated in the offering and selling process. It is very useful to be able to identify this price sensitivity and respond adequately to it.
Our approaches to behavioral pricing help you to make your offering more customer-centric – without changing your products and services – and in the process raise customer satisfaction and your likelihood of winning their custom.
Product and Pricing Management Along the Value Chain
Processes which have evolved over time and role allocation in product management are often weak spots that limit insurance providers’ scope. The interplay between sales, actuaries, product management and IT must function seamlessly in order to meet modern demands on agility.
Synpulse assists its clients with sound market experience, insurance expertise, and a systematic approach. Product development and pricing processes must guarantee the following:
Clear Knowledge of the Market
- Recognition of trends and identification of relevant competitors and their products
- Knowledge of needs, affinities and behavior of customers
Optimized Product Development
- Institutionalization of a process to develop new products and maintain existing ones that is coordinated between all the disciplines involved
- Bespoke offerings and product bundles for target groups, with the corresponding differentiation according to target positionin
- Agility and governance
- A sound basis for determining the pure premium with iterative optimization from an inside and outside perspective
- Finding the perfect balance between profitability and marketability
Support with Value Enforcement
- Raising efficiency and effectiveness through simplicity and accessibility in all channels
- Clear communication of central content and arguments
Secure Process Interfaces
- Seamless integration of products in existing customer and sales processes
- Optimized discount and plausible incentive systems
- Establishing continuous portfolio monitoring for its active management and for deriving mutation measures
- Systematic coordination of product portfolio management with actuarial pricing and iterative pricing for adequate evaluation of the existing insurance portfolio
Synpulse prepares a detailed situation analysis as a basis for identifying problems and compares the client’s present situation with best practice solutions. Gaps identified in this process can be addressed specifically with operative implementation measures. The insights gained here permit the client to build knowledge and skills and are operationalized in practical, systematic application.
The benefits of establishing systematic product and pricing management are as follows:
- Agile development of successful products supported by a broad base of knowledge
- Inclusion of all important groups, which leads to greater acceptance and thereby market success
- Reliable process, fewer errors, and lower costs
All insurance companies lose customers. In exceptional cases, this loss is unavoidable. As a rule, though, losing customers is painful. Employing predictive modeling for early identification of customers who are at risk of leaving, and taking steps that are tailored to the individual case can help to restore a customer relationship. Churn management offers solutions in this area.
Our experience shows that ideally there are three steps to implementing effective churn management:
Step 1: Create a Churn Model
The basis of effective churn management is a mature prediction of customer-initiated termination. It should identify as fully as possible customers who are at risk of leaving (max true positive, min false negative), but at the same time it should not include too many customers who are not (min false positive, max true negative). A clear indication must also be made of which factors determine the likelihood to churn.
Step 2: Compare with Customer Value Model
Because measures relating to customer churn should be targeted and not implemented according to the scattershot principle in order to achieve an optimal cost-benefit ratio, the customer value model (which usually exists already, otherwise it needs to be developed or optimized as well) is compared with the churn model. From the ensuing point cloud, specific clusters can now be formed for further action.
Step 3: Derive a Plan of Action
This step ultimately determines the success or failure of churn management. It is here that actions are derived from the clusters formed under step 2. These actions are designed specifically for the factors identified under step 1 and are therefore effective and to the point.
Synpulse has the mathematical and statistical know-how in modeling churn prediction and customer values, as well as broad market experience of marketing measures. This combination makes us the ideal partner when it comes to implementing effective churn management.
Effective churn management raises customer loyalty and customer satisfaction and helps to meet growth and profitability targets by ensuring that marketing measures are implemented efficiently and effectively.
Banks and insurance companies are subject to constant organizational and technological change. Precisely where major restructuring or launch projects are concerned, professional training is key to success. In «Training Solutions», Synpulse has developed a methodology for mastering these challenges with modern and effective training solutions.
If you are facing the challenge of implementing a major change project in your organization, Synpulse is the ideal partner for your internal communication and training. «Training Solutions» is the methodology we have developed to prepare your organization well in advance for change.
Our first step is to explore with you your communication and training needs. Then we jointly decide on the most suitable training resources. Whenever possible, we use modern tools such as e-learning, webinars and e-classrooms. This gives you maximum effectiveness at minimal cost.
Precisely where international projects are concerned, it is essential that training can take place independent of time and place and that assessment is automated. Traditional training methods often break the agreed budget with the cost of travel alone, which frequentlyoften makes this option unviable.
We employ «Training Solutions» continually and successfully in projects and optimize it on an ongoing basis. Its pragmatic approach and the mix of training resources in particular mean that our clients can tailor the training process to their needs. It also means that we can make adjustments as and when they are required. Our customers additionally benefit from experienced Synpulse project team members, whose expert knowledge and skills from an insurance and banking background make them highly effective in putting together training packages.
«Training Solutions» is an ideal way of meeting a large-scale need for training. Our clients benefit from our many years of expertise. We help you to achieve maximum effectiveness from your training at minimal cost and working with modern tools and resources.