RiskTech Forum

With SAS®, Ohio Mutual Insures Better Forecasting, Pricing

Posted: 18 June 2013  |  Source: SAS

SAS® Analytics gives insurer predictive firepower at a very affordable price.

Since 2009, Ohio Mutual Insurance Group has used SAS Analytics to explore price elasticity before making rate changes. Accurate forecasting with SAS enables the company to assess how proposed premium increases will affect renewals at agent and policyholder levels, so it can broaden its insurance lines with less risk.

Ohio Mutual writes nearly $190 million in annual premiums through independent agents in seven states, serving homeowners, drivers and farmers. Using SAS and a staff of just one analyst, Ohio Mutual can quickly forecast rate changes all the way down to the policyholder.

"We've just recently begun looking at the walk-away price for particular policies," said Dave Grove, Vice President of Product Management at Ohio Mutual. "A 5 percent increase on one type of policy could trigger much more price shopping than a similar increase to another policy or individual policyholder."

By better understanding price sensitivity, executives make better premium pricing decisions. "SAS provides us with an additional layer of comfort, knowing that the final rates we select will not be completely out of line," said Grove.

The company is also using SAS to it help price new policies that offer more options. One such policy offers homeowners different deductibles depending on damage type (fire, weather, theft). Grove’s analyst ran its entire homeowners line through SAS to estimate the best rates for the new product. The company has also explored data to look for discount options on business policies that make its commercial auto book even more competitive.

“We have found that forecast modeling is quick and easy without needing much IT help,” said Grove. “Having SAS gives us the capability to access the data to do this type of analysis and minimizes the time it takes. We can really do a lot with a little, which allows us to compete with companies that are significantly larger.”

Ohio Mutual initially did all its SAS analysis with one analyst, although it has since trained additional staff members. Given the minimal personnel needs, Grove is surprised when other companies assume this type of work is expensive. "There's this perception that you need a large staff of SAS experts and it costs a lot. That's not the case."