Insurance

With insurance sales shifting online quickly, consumers have ever greater transparency regarding pricing and benefits of insurance products. Cost-plus pricing which is used by most insurances is no longer feasible for their success.

Competition for insurers is increasing. Online brokers and Insurtech startups are playing an important role in today’s insurance world. Competing in a world defined by big data and analytics requires cutting-edge technology and new tools, not Excel-based models.

Although digitization is becoming ever more important in the insurance industry, sales channels remain very fragmented. From insurance brokers, partnering financial institutions, and third party intermediaries such as travel companies add complexity and intransparency to pricing decisions.

Insurances are often customer-specific, they want customers who have a higher risk pay a higher price for their product. Hence, most of them use cost-pricing meaning they charge a markup reflecting the individual’s risk. However, it is hard to measure risk while still having a differentiated cost structure.