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Global Knowledge , Local Focus .

A UDATEX Turkey March 5 , 2012. Global Knowledge , Local Focus . Pareto Principle_The Solera Way. 80/20 Rule – 80% of the claims are generated by 20% of the population . Focus critical time on understanding large claims dynamics 20 % of customers destroy value .

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Global Knowledge , Local Focus .

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  1. AUDATEX Turkey March 5 , 2012 Global Knowledge, Local Focus.

  2. Pareto Principle_The Solera Way • 80/20 Rule – 80% of the claims aregenerated by 20% of the population. Focus critical time on understanding large claims dynamics • 20 % of customers destroy value.

  3. Customer segmentation 20% destroy value Cumulative contribution to value added 200% 180 160 140 50% don’t create value 120 100 80 30% generate 150%of value 60 40 20 0% 0% 20 40 60 80 100% Percentage of customers Good customers at risk Managing actively ‘Up or out?’

  4. Pricing cycle Adequate pricing brings profits and increased surplus. Adequate Pricing Low surplus constrains writings; prices rise because supply cannot meet demand. Flush with surplus, competitive pressure leads to decreasing prices. Inadequate Pricing Inadequate pricing leads to net losses and decreased surplus. Indequate Surplus Adequate Surplus

  5. Price optimisationprocess claim propensity models constraints optimisation competitive market analysis new premiums customer behaviour models customer value models

  6. How do you manage your risk? Underwriter CombinedRatio Policy/Client

  7. Integrating structured data Underwriting Business Intelligence Cash settlement Recovery File closure Electronic inspection Rules Check, Communication Customer demographics Vehicle Info

  8. Identifying risks W/O Foglight With Foglight

  9. Can more be less CASE 1.- (Part replacement) Current labour rate: £30.00 per hour Spare part price: £200.00 Replacement time: 2 hours Labour Cost: 2 X £30 £60.00 Total Cost to Insurer £260.00 Parts Margin for repairer: £200 X 20% £40.00 Labour margin (Gross Profit) £60.00 X 64% £38.40 Total gross benefit for repairer £78.40 CASE 2.- (Part repair) New labour rate: £35.00 per hour Part repair time: 4 hours Total cost for insurer: 4 x £35 £140 Labour margin (Gross Profit) £140.00 X 64% £89.60 Insurer Saves £120.00 Repairer Gross margin Increase of £11.20 over 14%

  10. Penalties for Poor Data • Loss of competitiveness • Higher reinsurance costs • Unfavourable rating agency assessments • Loss of investor confidence

  11. Rewarding Robust Data Quality • Competitive advantage • Improved pricing for insurance • Discounted premium for reinsurance • Visible Management of Enterprise Risk • Credibility with rating agencies • Investor confidence

  12. Summary • Timely, actionable information allows the claim to move forward more quickly and nimbly. This enables us to manage our loss ratio effectively. • Forwardthinking insurers will transform their underwriting approach, intergrating the valuable information gathered from claims handling.To realize this, the data is available by teaming up with the right partners.

  13. Thank You Istanbul, March 5, 2012 Çağrı AKIN Managing Director at Audatex, Turkey c.akin@autoonline.com.tr Tel +90 (0) 216 554 65 00www.autoonline.com.tr

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