Moving Beyond Generalised Linear Models: A sophisticated pricing strategy incorporating competitor pricing

A general insurance company, Suncorp found that competitors’ pricing strategies were affecting their sales conversion and revenue due to undercharge or overcharge. The call center staff found that they needed to manually look at multiple websites from competitors in order to stay competitive with a new offered price at discretion. There was no consistent customer pricing framework for the staff to override in price when making a new offer.

Suncorp partnered with external consultant to reverse engineered competitors’ pricing to understand the actuarial rates. With this, they could develop a new rating factor - the competitor price - which became part of their ML model to calculate new insurance premiums for customer pricing. As a result, the call center staff no longer had to look up competitors’ websites for their prices in order to stay competitive, removing this manual process and opmitising productivity. Their pricing strategy now reflects their market positioning and the competitive landscape.

Outcome

The company’s insurance premiums and prices are now more competitive while still reflecting its market positioning. In addition, this new pricing strategy increases conversion and revenue. The manual work done by call center staff is now also automated to improve productivity.