A leading Canadian utility company offers home protection plans for plumbing, heating and air conditioning systems. They built risk-based pricing models to tailor insurance plans for different risk groups. For example, customers with the highest risk score might be better off replacing their equipment. Customers with the lowest risk scores for both heating and cooling might be upgraded to special protection plans. The standard insurance plan will be offered to those with moderate risk scores.
In addition to pricing, the risk score was used to identify the best prospects for promoting the proper insurance plans.
The objective of analytics was to build risk scoring models that can predict the likelihood of calls for servicing HVAC equipment and potential costs associated with them. Each current customer will be scored with risks. The risk score of the current customer base serves as the basis for developing pricing models in order to refine pricing and product offering at renewals; for winning back lapsed customers; and up-selling additional products, e.g., premium over risk, new equipment, special protection plans.
The following variables in Manifold’s data products played a significant role in the client’s risk models:
In addition to risk models:
Manifold’s data has increased the predictive power of risk models significantly: