Importance of Pricing in the Insurance Industry

The insurance industry is constantly evolving, becoming more technical and complex with advanced procedures, enormous databases, and highly qualified professionals. In this ever-changing landscape, insurance companies, reinsurance, brokers, and any other company in the sector must not only stay informed about the latest advancements but also leverage innovative technologies, including cutting-edge pricing tools.

Genesis understands the need to keep up with the fast pace of the industry. To ensure our operations thrive in this evolving sector, Genesis’ managers has invested in technology to improve three crucial activities within reinsurance operations:

● Pricing.
● Communication.
● Back-office support.

One of the key aspects of the insurance business is pricing . Every risk and opportunity that comes to Genesis must undergo a process called underwriting, where we evaluate them and qualify them as “insurable.” Once we deem a risk as appropriate for insurance, the next step is determining how much premium should be charged to make it a profitable venture for the insurance chain and, specifically, for Genesis.

There are various approaches to assess risks and determine the appropriate premium:
● Using own tools and studies: Some companies develop their own proprietary tools and methodologies to assess risks and determine premiums. This approach allows for customized solutions tailored specifically to the company’s needs and objectives.
● Leveraging existing tools and theories: Alternatively, companies can rely on established tools and theories developed by industry experts. These tools provide a framework for assessing risks and determining appropriate premiums, but they may require additional adjustments to suit Genesis’ specific requirements.
● Relying on serendipity: The third approach, often referred to as “following,” involves relying on chance or luck to determine pricing. We do not recommend this haphazard approach as it lacks a systematic and data-driven process.

We, on the other hand, have chosen the path of developing our own pricing tool to evaluate each risk and determine suitable premiums. A pricing tool is a digital instrument capable of gathering information from databases, performing complex calculations and following specific procedures to generate results, solutions, and suggestions.

The core of this pricing tool consists of two main components:

● Data entry: The information entered in the tool is critical as the adage goes, “Garbage in, garbage out.” In the underwriting process, we select reliable information to include in the database, ensuring the accuracy and high quality of the data.
● Kernel for rates applied: This component is the heart of the tool, where a programmed subroutine incorporates arithmetic, calculus, statistics, probabilities, graphical mathematics, resolutions, experiences, economics, financial concepts, and Genesis’ unique considerations. It ensures a comprehensive approach tailored to the company’s specific needs when calculating premiums.

With the combined expertise of technicians, engineers, actuaries, and managers, Genesis has successfully developed a robust pricing tool in a short period of time. This tool incorporates our collective experience, allowing us to price proposals and provide accurate underwriting assessments.

To be competitive in the insurance industry today, companies must be agile, reliable, and committed to clients, shareholders, technology, and the environment, and because we understand this imperative, is why we are committed to developing a range of tools and procedures that make us more resilient, trustworthy, and technically advanced compared to our competitors.

Genesis’ Pricing Tool provides clients with a wide range of prices, structures, solutions, and flexibility, enabling them to make informed decisions quickly. Moreover, Genesis takes pride in our capability to provide a comprehensive underwriting assessment based solely on our financial capacities, economic considerations, experience, and expertise, without relying on external dependencies.

It then comes with no surprise that in a short amount of time, Genesis has received positive feedback from clients, further demonstrating the effectiveness of our pricing tool and the value it brings to our operations.