Building Pricing Models

Pricing Services

Building a pricing model is not just an actuarial exercise. A key element to success is strong collaboration between underwriting, claims and actuarial. This collaboration is critical for at least a couple of reasons:

  1. To leverage knowledge and expertise of each of these disciplines
  2. For end-user adoption

We have built many pricing models for a wide range of products and coverages. We apply a collaborative approach that utilizes diverse and complementary perspectives to drive a better result. This collaborative approach also promotes stronger engagement within our clients’ organizations, which improves end-user adoption of the pricing models.

Below are some considerations when building a pricing model:

  • What is the coverage being priced?
  • Who are the potential insureds?
  • What data/information is available to quantify the exposures and parameterize the model?
  • Who will use the model?
  • Will the user manually enter customer information or will it be pre-populated?
  • If using pre-populated data, how often will this data be updated?
  • Will the pricing model be used to calculate rate change for renewals?
  • Will the pricing model include schedule and/or experiencing rating components?
  • Will there be illustrative exhibits included in the model?
  • Will the model be integrated with a production system or data warehouse?
  • How will the model be secured and distributed (e.g. email, shared drive, integrated application)?
Copyright © Moore Actuarial Consulting, LLC.
Website Development & Hosting by Venacity