In the U.K.’s highly competitive personal lines insurance market, many insurers are missing out on significant profits due to uncompetitive pricing. Yet the solution is within their grasp. Direct personal lines insurers can no longer afford to rely solely on traditional ‘cost plus’ pricing methods. As the pricing war intensifies, market leaders are moving to a value-based pricing architecture, separating the technical pricing function from the customer value pricing function in order to acquire and control profitable customer relationships.
This architecture places customers, their needs and behaviors at the heart of the insurer’s decision-making process. This is not only in line with the direction of regulatory travel, but also, critically, lays the foundation for driving innovation in product and service offerings.
In this Executive Insights, L.E.K. Consulting reveals why personal lines insurers need to pursue the benefits of a value-based pricing model in order to remain competitive. London Partners Ashish Khanna and Peter Ward set out the organizational approach and structure required to deliver this pricing architecture and examine how insurers can future-proof their organizations in light of technological developments on the horizon.
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