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Insurance Results Projector – Data-driven risk analysis

Data Analytics solution for insurance companies to predict claim expenses

Key benefits at a glance

  • Efficient prediction of underwriting results including robustness test
  • Validated procedure, which is continuously further developed
  • Individual estimation of expenses for insurance claims incl. risk assessment for your portfolios
  • Acceleration of the business planning process
  • Modern graphical presentation of the results

 

Your challenge in predictive risk analysis

For insurance companies in the property and casualty sector, the estimation of future underwriting results is a particular challenge due to the estimation uncertainty regarding future risks. The forecast of the expected underwriting results is complex, especially since influencing factors such as natural disasters are difficult to grasp. However, the expected results are highly relevant for numerous business areas.


Property and casualty insurance companies require forward-looking underwriting for the following occasions:

  • Valuation of portfolios in the context of purchase and sale decisions
  • German GAAP requirements, for example the forecast as part of the annual report
  • Underwriting/Pricing
  • Risk management and controlling
  • Back-testing to determine the quality of historically estimated underwriting results 
For the implementation of such estimates, high costs are usually incurred, especially for software and staff. In addition, the reduction of the processing effort through the use of modern IT applications seems to have failed so far. This is because, despite the advancing digitalisation, insurance companies have to determine numerous variables and assumptions for the forecast of underwriting results.

 

 

Our solution – Insurance Results Projector

With the Insurance Results Projector we handle the estimation of underwriting results for you. The data analytics solution for insurance companies estimates future profits from portfolios of property and casualty insurance contracts based on historical data. The prediction can be made for both insurance and reinsurance contracts and is based on previously formed portfolios of homogeneous insurance contracts. For this purpose, expected values are determined with regard to all P&L-relevant items such as premiums, operating expenses and expenses for insurance claims.

PwC is the market leader in Germany in the field of annual audits of insurance companies. For this reason, we have ourselves already successfully applied the Insurance Results Projector in the context of numerous annual audits and further optimised it through our own experience.

The estimation of claims expenses is done in 4 steps:

01

Import of historical loss frequencies and amounts

First, we extract your actual historical loss frequencies and amounts separately for each portfolio from your accounting system and import them into the Insurance Results Projector. Based on the assumptions determined by our industry experts, the data is then normalised to today's conditions by the Insurance Results Projector (indexation).

02

Graphic preparation and probability distribution

The Insurance Results Projector then graphically prepares the normalised loss frequencies and the average loss amounts. Our industry experts determine the probability distribution for these two variables.

03

Predictive Analytics

On the basis of the determined probability distribution of the variables "loss frequency" and "average loss amount", the loss expenses are now estimated by a Monte Carlo simulation (predictive analytics). This takes particular account of the random risk as a component of the underwriting risk.

04

Risk assessment

The position of the projected loss expenses in the historical probability distribution thus allows a final risk assessment to be made with regard to the amount of the loss expenses.

Benefits of the Insurance Results Projector

content_pasteEstimation of all P&L-relevant items

Complete estimation of all P&L-relevant items such as premiums, operating expenses and expenses for insurance claims

groupDefinition of variables

Necessary variables/assumptions are defined in consultation with you by experts from PwC Germany

assessment Assessment and risk evaluation

Probability-weighted assessment and risk evaluation of estimated expenses for insurance claims

verified_userValidated procedure

Reliability and appropriateness of the procedure has been confirmed by the use of the Insurance Results Projector in numerous annual audits of insurance companies by the market leader PwC

cachedEnd-to-end service

From data procurement to the definition of assumptions to the graphical preparation of the results

euro_symbolCost savings and efficiency
Savings in staff expenses and relief for the controlling department
 

Pricing

The portfolios are not clear or you have another special requirement? Then please contact us and we will prepare an individual offer for you.

Small
€ 27,500
  • Includes 5 portfolios 
  • 2 runs for each portfolio with different variables
  • 5 users inclusive
  • We calculate all neccessary variables for the prediction
  • Provide us with access to your accounting system and we will extract the historical data ourselves (full service from end to end, from data extraction to the prediction)
Large
€ 57,750
  • Includes 15 portfolios 
  • 2 runs for each portfolio with different variables
  • 5 users inclusive
  • We calculate all neccessary variables for the prediction
  • Provide us with access to your accounting system and we will extract the historical data ourselves (full service from end to end, from data extraction to the prediction)

Get in touch

Please provide your company​ email address if you would like to receive more information, an offer or a demo of this product. We will contact you as soon as possible.

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FAQ

What is predictive analytics?

Predictive analytics is the determination of future profits (here: insurance results) based on historical data, statistical methods and machine learning.

What is a robustness test?

The robustness test (negative test) ensures that the inputs and assumptions made in the context of an improper application, e.g. through inappropriate, incorrect or no data input at all, are also recognisable as such and thus no further processing of the results takes place.

What is a homogeneous portfolio?

A portfolio is a homogeneous group of insurance contracts. As the simplest method, insurance contracts can be clustered on the basis of the line of business. Depending on the business activity, other criteria such as geographical components may be useful for portfolio formation.

Why are risk analyses particularly relevant for the insurance industry?

On the basis of order books and known acquisition and production costs, industrial companies have the possibility to make relatively reliable estimates of profit forecasts. In contrast, the estimation of claims expenses for insurance companies results in a significantly higher estimation uncertainty. This is due in particular to the assumption of the random risk as a component of the underwriting risk by the insurance company. Because it has been proven that, at least to a certain extent, damage occurs by chance. Therefore, in addition to the forecast of expenses for claims not yet settled, a risk analysis should be carried out in relation to the expected amounts.

What does the future of the digital insurance industry look like?

IT-supported progress is currently a strong focus in the insurance industry. In addition to online claims reports, customer apps and cooperation with digital companies, automation using blockchain technology could save a considerable amount of administrative work in the future.

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