Insurtech is transforming the insurance industry with innovative solutions that leverage data, analytics, and digital platforms. However, insurtech pricing accuracy is still a challenge that requires critical thinking skills to overcome. In this article, you will learn how to use critical thinking to improve insurtech pricing accuracy in six steps.
The first step of critical thinking is to identify the problem that you want to solve. For insurtech pricing accuracy, the problem could be related to data quality, model validity, customer segmentation, competitive positioning, or regulatory compliance. You need to define the problem clearly and precisely, and avoid vague or ambiguous statements. For example, instead of saying "our pricing is not accurate", you could say "our pricing is not reflecting the risk profile of our customers".
Additionally, further state the impact of the pricing inaccuracies as well as the potential impact of those inaccuracies should they be left unmanaged over a given period.
Critical thinking in insurtech pricing accuracy involves scrutinizing data sources, identifying potential biases, and evaluating the relevance of variables. By questioning assumptions and considering alternative perspectives, one can uncover hidden patterns and outliers that may impact pricing models. Additionally, a critical thinker in insurtech can assess the dynamic nature of risk factors, adapting models to changing market conditions. Regularly updating algorithms based on new information and customer behavior ensures ongoing accuracy. Ultimately, integrating critical thinking into insurtech pricing processes fosters a more robust and adaptable approach, enhancing overall accuracy and risk assessment.
The second step of critical thinking is to gather relevant information that can help you solve the problem. For insurtech pricing accuracy, the information could include data sources, analytical methods, industry benchmarks, customer feedback, or best practices. You need to evaluate the information critically and objectively, and avoid biases, assumptions, or fallacies. For example, instead of relying on your intuition or experience, you could use data-driven evidence or logic to support your arguments.
The third step of critical thinking is to generate possible solutions that can address the problem. For insurtech pricing accuracy, the solutions could include data cleaning, model testing, customer segmentation, pricing strategy, or regulatory alignment. You need to be creative and open-minded, and avoid jumping to conclusions or sticking to one solution. For example, instead of settling for the first solution that comes to your mind, you could brainstorm multiple solutions and compare their pros and cons.
The fourth step of critical thinking is to evaluate the solutions that you have generated and select the best one. For insurtech pricing accuracy, the evaluation criteria could include feasibility, effectiveness, efficiency, scalability, or sustainability. You need to be rational and systematic, and avoid personal preferences or emotional influences. For example, instead of choosing the solution that you like the most, you could use a decision matrix or a scoring system to rank the solutions based on the criteria.
Including the perspectives of your cross-functional stakeholders during this step is essential as well. It helps to prevent unforeseen blindspots which may impact the implementation and outcome phases that follow. It also helps to prevent unconscious bias towards any one solution. Ensure however, that cross-functional stakeholders are well selected and that their input will tangibly affect or be affected by the subsequent implementation and outcome.
The fifth step of critical thinking is to implement the solution that you have selected and monitor the results. For insurtech pricing accuracy, the implementation process could include data preparation, model deployment, pricing adjustment, customer communication, or regulatory reporting. You need to be proactive and collaborative, and avoid procrastination or isolation. For example, instead of delaying the implementation or working alone, you could set a timeline and involve your stakeholders.
The sixth and final step of critical thinking is to review the outcome of the solution and learn from the feedback. For insurtech pricing accuracy, the outcome measurement could include data accuracy, model performance, customer satisfaction, market share, or profitability. You need to be reflective and constructive, and avoid complacency or defensiveness. For example, instead of ignoring the feedback or blaming others, you could analyze the feedback and identify areas for improvement.
Best solution to use pre-built Rating framework that includes all rate factors and rate logic for given exposure.Lot of Insurance companies are still using Judgmental rating that may not give us accurate results. For example - in our company we use Guidewire Standard based templates rate engine for ISO Commercial Lines product