Claims process modeling &
Profitability Analytics
Created a predictive mathematical model and generated analytics
to enable client to forecast future profitability of warranty claims product
to enable client to forecast future profitability of warranty claims product
Our Client
- Product unprofitability was threatening well-being of client’s company
- Some of client’s warranty products were significantly unprofitable but client had minimal visibility into root causes.
- Substantial warranty claim data was available for many years but client did not have the bandwidth or in-house expertise to perform detailed analysis of the data
Our Engagement
- Performed “deep dive” into historical warranty claims data to understand the underlying parameters such as warranty term, automobile miles, make, model, year etc.
- Segmented data in a multiple ways including by type, agency, vehicle (make/model/year), coverage period, etc. to reveal any significant trends within the segments
- Modeled the rate of claims arrivals and cancellation of contracts against sales data
- Revealed the key factors that determined profitability by segment and forecast future claims costs
Our Results
- Our model provided the client with a path to profitability for their product portfolio and the estimated amount of months before client would turn the corner to profitability
- Analytics provided the client with a predictable Profitability Model for claims
- Identified profitable segments and vehicle types and pinpointed areas of significant risk that could be mitigated by rate increases or other means