Improving Distribution management
Details
Background
More Metrics worked with a leading UK insurer to assess the quality of business sourced from various distributors, primarily due to the delayed emergence of mortality experience data.
Mortality rates are fundamental in pricing life protection products, and any mispricing can significantly impact future profitability. Traditional methods require years to gather sufficient mortality data, necessitating a proactive approach to evaluate and manage distributor performance effectively.
Solution
More Metrics offers a Mortality Standard Mortality Ratio (SMR) dataset that provides mortality risk assessments segmented by postcode, age band, and sex, allowing insurers to score clients promptly upon data capture. By analysing the average client scores, the insurer was able to gauge the relative mortality quality of each distributor's portfolio.
Results
Implementing the Mortality SMR dataset enabled the insurer to:
• Monitor Distributor Performance: Continuously assess the mortality profile of business from each distributor.
• Inform Strategic Decisions: Make data-driven decisions regarding commission structures, distributor collaborations, and adjustments to marketing, products, pricing, or rating factors to target more profitable segments.
• Reduce Mispricing Risk: Utilise immediate mortality evidence to decrease the mispricing risk premium and improve profitability.