Inflation Update

Hello,

This month we have an article on the exponential growth in pricing team size, along with the updates.

Our big announcement is that Errars will soon be changing its name to?Price Writer. I decided this would better communicate my mission of helping insurers to win at pricing and my vision of every insurance customer paying the exact right price.?

300% GROWTH IN PRICING TEAM SIZE???????

In 2009 in the UK, it was common for insurer pricing teams to be under 10 people. By 2022 it was common for insurer pricing teams to be over 100 people.?By the year 2030, pricing teams will average at least 300 people.?Some providers will have over 500. With similar magnitude of growth for pricing teams in other countries and in other insurance providers like intermediaries.

It’s no wonder that pricing teams have grown tremendously over the years and still will. With more hands-on deck, pricing teams can do a better job of profitably growing the business by avoiding anti-selection, selecting against their competitors, eliminating errors in pricing and thereby, improving the pricing system. In the words of?Helen Keller,?“Alone we can do so little, together we can do so much."?There is a never-ending advantage to improving your prices, and there is also far more that can be done than is currently being done and this shows no sign of ending. So, as complexity builds so does the need for more people to support the key activities too.

An effective pricing department needs much more than just pricing analysts, the roles can vary depending on the size and complexity of the insurance company, but generally, there is a need to expand all roles including: Data Engineers, Data Scientists, IT Professionals, Compliance and Legal Professionals, Testers, and other roles include trainers, communicators, and business partners.

LinkedIn data shows a strong exponential year-on-year growth of people in insurance pricing and insurance data jobs. Below are a few reasons why it’s challenging to recruit people for the pricing team:

Shortage of qualified candidates: The insurance industry requires specialized skills and knowledge, particularly in actuarial science. Remember actuaries do not have a monopoly on actuarial science. Almost anyone with training and experience can use these techniques. But there is still a shortage of candidates with the necessary technical expertise and experience to fill open positions.

Competitive job market: The insurance industry is highly competitive, and candidates with strong analytical and technical skills are in high demand. They may have several job opportunities to choose from, making it difficult to attract and retain top talent.

Perceptions of the insurance industry: The insurance industry may not be viewed as an attractive career option by some candidates due to unfair perceptions of it being bureaucratic, slow-moving, and lacking in innovation.

Limited diversity: The insurance industry has historically struggled with limited diversity, particularly in senior roles. This can make it more challenging to attract a diverse pool of candidates and can limit the talent pool available for recruitment. To overcome these challenges, insurance companies need to offer genuinely competitive salaries and benefits packages, provide real opportunities for professional development and growth, emphasize the importance of diversity and inclusion, and cultivate a positive reputation as an innovative and forward-thinking industry. We must not be elitist. Additionally, companies may need to broaden their recruitment efforts by leveraging social media, attending job fairs, and partnering with universities and industry associations to attract and retain top talent.

Top Tips

• Always be recruiting by having continual activity with HR and recruiters. Meaning you get the best candidates for your roles.
• Make contacts with universities and support internships.
• Keep contact with good people at all levels.
• Don't neglect senior levels just because salaries are high, and candidates are hard to find.

Building and growing a successful pricing team in the insurance industry requires a strategic approach that balances technical expertise with business acumen, regulatory compliance, and innovation. Companies must be prepared to invest in competitive salaries and benefits packages, provide professional development and growth opportunities, and create a positive work culture that fosters creativity, collaboration, and diversity. In addition, companies must be willing to broaden their recruitment efforts by leveraging various recruitment channels, partnering with universities and industry associations, and developing effective retention strategies.

By focusing on these factors, insurance companies can attract and retain top talent, build a strong pricing team, and achieve long-term success in a highly competitive market.

Exercise: Write down how many people worked in your insurance pricing department when you started your career.

Activity: Discuss what more you could achieve with more pricing people with other people in your team.

Question: What will happen to you when your competitors triple their pricing teams if you don't keep pace?

Prefer to listen to this article? Now you can on You Tube?https://www.youtube.com/watch?v=eZ7goYaG4Ak

INFLATION MAY UPDATE???????

IT IS DOWN BUT...?

The headline rate has dropped to 8.7%. That is caused by the big energy increases falling out of the data. Core and service-based inflation are both up.

1. ?? The latest figures from the?ONS?are out and UK?CPI?inflation has fallen back from 10.1% to 8.7%.?

2. The?ONS?says?insurance inflation?is 17.9% which is slight increase from 17.7% last month.?

?? 40.8% for?car, up from 38.6% (my own quote is up 31%).??

?? 10.2% for?travel, down from 13% last month.?

?? 7% for?health, up from 6.2% last month.?

?? 6.9% for?home?contents, which is down from 9.6% last month.?

3.??? Repair and maintenance of?property?is at 5%, down from 5.6%.?

Materials for repair is at 9.3% (down from 10.2%).?

Tradespeople services are averaging only about 1.1%, slightly down from 1.5% last month.?

4. ?? Maintenance and repairs of?personal vehicles?is up at 9.6%, compared to 6.4% last month.?

5. ???Holiday?inflation remains high at 12.7%, up from 11.9% last month.?

Hotels is at 14.9%%, down from 16.6% last month.?

UK Camping, holiday resorts, and centers are up 12.5% from 11.4 last month%.?

6. ?????Veterinary?and other services for pets is 12.1%, down from 12.4% last month.?

7. ???Hospital services?is steady at 7.6%.?

Medical products at 8.1% up from 8.3%.?

Outpatient services steady at 4.1%, compared to 4.3% last month.?

8. ABI, Confused and Consumer Intelligence have the following latest figures:?

???ABI says car?is up 16% at the end of Q1 2023 – but only a 2% rise Q1 2023 to Q4 2022.?

???Confused says car?is up 20% (at the end of Q1 2023). 1% higher than their last report at the end of 2022.?

???Consumer Intelligence says car?is up 21.1% at end March 2023 compared to 12.8% at the end of Sept 2022.?

???ABI says Home?up 6% at the end of Q1 2023.?

???Consumer Intelligence says Home?is up 6% (at the end of Feb 2023).?

9. The?OBR?forecasts are:?

?? Q2 2023: 6.9%?

?? Q3 2023: 5.4%?

?? Q4 2023: 2.9%?

?? Q1 2024: 1.5%??

KEATING INDEX?

Car 1??The three cheapest quotes are 261, 263, and 276. The average of the top five is ￡273. Top has changed by ￡28 (12%) (ouch) compared to last month and the average of the top five is ￡29 different (12%). Comparing the cheapest to the average top 5 is a ￡12 difference (5%). This has changed from ￡11 (5%) last month. I currently pay ￡206 for my ordinary ford focus and two drivers. That is a 31% increase if I was renewing today.?

Car 2?? The three cheapest quotes are 270, 303, and 312. The average of the top five is ￡304. Top has changed by ￡29 (12%) compared to last month and the average of the top five is ￡46 different (18%). Comparing the cheapest to the average top 5 is a ￡34 difference (13%). This has changed from 17 (7%) last month. I currently pay ￡234 for my ordinary ford focus and three drivers.?

?

Electric Car? The three cheapest quotes are 360, 383, and 384. The average of the top five is ￡385. Top has changed by ￡15 (4%) compared to last month and the average of the top five is ￡5 different (1%). Comparing the cheapest to the average top 5 is a ￡25 difference (7%). This has changed from 35 (10%) last month. I don’t have an electric car, but I have chosen quotes for an MG4 which is very similar to my Ford focuses.??

Home?? The three cheapest quotes are 205, 250, and 256. The average of the top five is ￡249. Top has changed by 0 (0%) compared to last month and the average of the top five is ￡31 different (14%). Comparing the cheapest to the average top 5 is a ￡44 difference (22%). This has changed from 13 (9%) last month. I currently pay ￡156 for my rather ordinary house. That is also a 31% increase if I was renewing today.?

Landlord?? The three cheapest quotes are 138, 162, and 204. The average of the top five is ￡204. Top has changed by ￡8 (6%) compared to last month and the average of the top five is ￡16 different (9%). Comparing the cheapest to the average top 5 is a ￡66 difference (48%). This has changed from 58 (44) last month. This is for buildings cover on an ordinary two bed purpose built flat.?

Travel?? The three cheapest quotes are 33, 42, and 42. The average of the top five is ￡42. Top has changed by ￡-15 (-31%) compared to last month and the average of the top five is ￡-15 different (-27%). Comparing the cheapest to the average top 5 is a ￡9 difference (26%). This has changed from ￡9 (19%) last month. I currently pay ￡31 for annual to Europe for a healthy family of four.?

Pet 1?? This is for a fictional new crossbreed dog called Hamilton. The three cheapest quotes are 97, 100, and 114. The average of the top five is ￡109. Top has changed by ￡0 (0%) compared to last month and the average of the top five is ￡0 different (0%). Comparing the cheapest to the average top 5 is a ￡12 difference (13%). This has changed from 12 (12%) last month.?

Pet 2?? This is for a fictional new cat called Burr. The three cheapest quotes are 82, 86, and 97. The average of the top five is ￡94. Top has changed by ￡4 (5%) compared to last month and the average of the top five is ￡1 different (1%). Comparing the cheapest to the average top 5 is a ￡12 difference (12%). This has changed from 15 (19%) last month.?

Health???? The three cheapest quotes are 127, 143, and 14. The average of the top five is ￡144. Top has changed by ￡0 (0%) compared to last month and the average of the top five is ￡5 different (4%). Comparing the cheapest to the average top 5 is a ￡17 difference (13%). This has changed from 12 (9%) last month. Cover is on a healthy family of four.?

Have a better than great day

Jeremy

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