A leading global manufacturer raised concerns that its extended warranty program wasn’t profitable and causing profit margin issues. Pricing was based on a limited set of factors that didn't reflect the current risk landscape, or the repair costs associated with warranty claims.
We worked in collaboration with the manufacturer, plus our Affinity Insurance team, to produce a new warranty pricing strategy and update the manufacturer’s management information systems, tailoring different elements to the needs of the business. The solution included the following elements:
01
Using a model which leveraged both historical data and advanced analytics, we were able to set rates more accurately which helped bring the loss ratio closer to the rate the business required. The model worked worldwide, producing tailored pricing for more than 100 individual countries.
02
To enable the manufacturer to apply the new rates easily, we worked together to develop a new rating structure it was comfortable with and could deploy globally. This allowed the manufacturer’s team to quickly calculate customer-specific rates based on the new model.
03
We created a comprehensive dashboard providing ongoing monitoring of the warranty program's performance, displaying real-time data against historical benchmarks.
The implementation of the new pricing model and management tools had a significant impact on the manufacturer’s warranty program, delivering:
The dashboard enabled the manufacturer to continuously monitor performance of the warranty program and make informed decisions based on up-to-date data and comparing predicted performance against actual emerging experience. It was able to show claims mitigation measures could improve the loss ratio for the warranty program by 30%.
Ready to take more control and get more value from your warranty program? Request a demo of our in-house solutions or speak to our actuarial specialists today.
