VSK increased profitability and controllability of retail insurance using SAS Real-Time Decision Manager

2019: Increase in profitability and controllability of retail insurance

On August 27, 2019 the SAS company reported that VSK increased profitability and controllability of retail insurance using SAS Real-Time Decision Manager. The project is implemented by GlowByte Consulting company.

According to the company, VSK completed the first phase of creation of a system of automatic decision making on the basis of SAS Real-Time Decision Manager. A system is intended for increase in accuracy and controllability of preinsurance check of retail types of insurance. According to the results of the pilot potential to decrease in unprofitability is observed and the speed of making changes in the strategy of underwriting increased.

In the competitive changeable market of retail insurance of the company actively look for ways of increase in profitability. Key methods of achievement of this purpose – decrease in unprofitability and fast reaction to possibilities of expansion in target segments. However the barrier – the separate systems in which preinsurance verification of requests for agreements studies in quite simple logic gets in a solution of these tasks. Simplicity of logic of segmentation and tariffing does not allow to manage adequately unprofitability, and the lack of flexibility does not allow insurers to react to market opportunities quickly. Allow to solve these problems and increase profitability of insurance business centralization, automation and increase in accuracy of segmentation and tariffing at a stage of preinsurance check.

Having carried out the analysis of business processes, VSK company came to these conclusions and one of the first in the Russian insurance market made strategic decision to invest in creation of a single system of decision making for optimization of preinsurance checks. Centralization of setup and execution of underwriting segmentation strategies and tariffing and also fall forward of making changes in these strategy was the purpose of creation of a system.

By search of the platform for creation of decision making system the company considered exclusively large players in the market of a business intelligence. In addition to functionality of software and its capability to carry out tasks of "VSK", wide some other requirements was considered. Software had to have visual interfaces of setup without the need for programming. It is necessary for fast reaction to market changes. Also software had to ensure trouble-free operation in the conditions of a big flow of requests for quotations – a standard situation in retail insurance. As a result of careful comparison of solutions, available in the market, the SAS Real-Time Decision Manager system was selected.

The project of creation of the central decision making system on the basis of SAS RTDM was separated into business phases that in most short time to begin to receive a significant financial result. Technology difficult centralization of preinsurance checks in car insurance became the purpose of the first phase. Such purpose was selected not casually – its achievement would serve as some kind of guarantee of working capacity and terms of system deployment for other types of insurance, including settlement processes.

The first project phase in turn passed in several stages. The carried-out works allowed to lay the foundation for expansion of a system on all business of the company. So, at the first stage of the first phase the preproject within which business process of preinsurance check, data sources and sources of requests for agreements is inspected was carried out. Technological hazards at an early stage were as a result revealed and the plan for their elimination is developed. At the second stage integration of SAS RTDM with key sources of data and the front systems was carried out and segmentation strategy is configured. At the third stage the working environment where on a small flow of agreements of car insurance the system effectiveness was estimated was launched. As a result the first project phase successfully came to the end at the beginning of August, having taken only 4 months.

Having estimated results of trial operation, the management of "VSK" made the decision on full-scale application of a system in the largest regions of presence of the company in the Russian Federation.

The implemented project, certainly, is important for us. It allows to change quickly the strategy of underwriting, almost without participation of an IT block and increases competitiveness and speed of reaction to change of external conditions. It should affect profitability of business of the company positively. And all these effects will amplify when we transfer underwriting strategy for all mass types of insurance to RTDM and also we will connect new data sources and we will implement risky models. told Vasily Busarov, the vice president, the head of Command center an insurance portfolio of VSK

There are obstacles disturbing retail insurance companies in fight for a market share and marginality. First, it is the risks assessment error according to requests for agreements which is often executed on the basis of simple business rules. Secondly, it is separate, often "hardwired" in the form of the code in the front office systems of the logician of decision making on preinsurance check. It is difficult to change such logic that does not allow the companies to react quickly to actions of competitors or to quickly start sales of insurance products. To answer both calls and to increase marginality, VSK company of one of the first in the market began creation of a centralized system of decision making for preinsurance checks, and we are glad that for this purpose the company selected the solution SAS RTDM. Stepan Vanin, the head of business solutions for an insurance sector of SAS Russia/CIS told