Micro Tariffing is an efficient vehicle to reduce risk and calculate a competitive price at the same time. In some countries, insurance companies have controlled access to essential public registers to retrieve valuable customer and risk information, such as Social Security Numbers (SSN) or car registration numbers.
But this is only part of the need. To achieve a full picture requires access to refined datasets, an extremely open and agile product configuration- and tariffing engine as well as specialized knowledge. Only IBSuite and the IBA partner ecosystem can deliver this.
Micro tariffing, aka Micro rating, is all about narrowing down segmentation and variance at the same time, and is mostly done either geographically or demographically. Some examples:
ZIP-codes do not give meaningful segmentation when dealing with burglaries, if statistics show that 65% of all burglaries are committed within a distance of 500 meters from a train station. No matter the ZIP-code.
If the policy holder has a basement to his house, adding an extra premium due to flooding risk doesn’t make much sense if he lives on top of a hill, due to the fact that incoming water invariably comes from the sewers.
Flexible tariff engine
IBSuite’s tariff and rating solution offers a combination of strengths from the powerful table based rating engine and the flexible rule-/scripting based rating engine. The data used for micro tariffing can either be stored locally or consumed via web-services from a third party data provider – or a combination of the two.
The above example with burglaries is in IBSuite implemented directly in the tariff, meaning that it is an integrated part of this particular insurance product and not something added on the side. Consequently, any recalculation of the premium – e.g. as part of a mid-term adjustment – will automatically adjust for a changed risk profile as well.
IBA has partners delivering this kind of refined data in an increasing number of countries.