Think your pricing model works for you? We bet it doesn't

Think your pricing model works for you? We bet it doesn't

From claims to underwriting, the life insurance industry is experiencing its fair share of digital transformation. One area, however, remains resolutely unchanged, and it’s causing life insurers to miss out on serious revenue.

You caught us, we’re talking about pricing (again).

The overwhelming majority of life insurers don’t draw a direct link between their outdated pricing practices and profitability - and that’s a mistake. By not acknowledging the full impact pricing has on profits, it’s impossible for insurers to find their efficient frontier (the optimal pricing range depending on an insurer’s objectives).

We understand that different companies have varying approaches when it comes to their pricing models (probably better than most). One might be willing to sacrifice profit in exchange for sales. Another might prefer profit to market share. Whichever strategy you’re using, you’re never going to achieve the best possible outcome without finding your unique efficient frontier.

Understanding your efficient frontier makes this optimal pricing possible, but how do you find it? Without the right approach to pricing, you don’t.

“Without fully integrating actuarial and data science with sales and competitive data analysis, you can’t find your efficient frontier,” explains Montoux CEO Klaas Stijnen.

Montoux was founded by actuaries in order to address this unique problem of pricing optimization. Our technology takes into account a life insurer’s specific strategies and transforms the pricing process to meet those objectives. Whether the priority is sales or profitability, or even if they’re of equal importance, finding that sweet spot on your efficient frontier can radically transform how you meet your objectives. We don’t tell you what your strategy should be, we don’t tell you what decision is the right one, we just give you what pricing teams without Montoux don’t have - the complete picture to make an informed decision.

So now maybe you’re thinking, why Montoux? Why can’t I simply have my own internal team of actuaries find this elusive efficient frontier?

The answer is, you could, but there’s a reason it’s rarely done. Developing the tools to find your optimized pricing, which will inevitably shift over time with industry trends and changing objectives, is a big undertaking.

It involves significant integration between numerous, typically outdated systems, as well as the development of your own unique optimization algorithm. Follow this with a testing period, adjustment period, and full integration with the firm’s data banks, you’re looking at a massive independent investment. It’s entirely possible to do in house, but this investment is typically outweighed by other development priorities and the demands of business as usual.

Here comes the sales pitch.

That’s why our customers let us handle it. We are the experts here, we’ve done it before multiple times. We have the computing power, the highly scrutinized, well tested models, and the data scientists and actuaries dedicated to leveraging the power of data specifically for life insurance pricing.

And now you’re thinking, why would I bother to do this in the first place? I have enough on my plate without having to optimize my pricing process.

Valid point, and we get it. Data consolidation and integration, as well as updating the claims and underwriting process, are taking priority for most life insurers. These are big things to change, to digitize, to update - but, pricing doesn’t have to be.

Optimizing your pricing process isn’t a terribly involved process requiring you to pump the brakes on your other projects. Rather, implementing a pricing optimization model like Montoux’s is a relatively easy change that creates immediate, significant impact on your revenue streams and sales.

Want to know more about how this pricing fix can boost your revenue without boosting your workload? Reach out to us, we’d love to tell you more about it.

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