Optimal Decisions Toolkit

Optimize pricing and cross-functional strategies with consumer elasticity insight

The LexisNexis® Optimal Decisions Toolkit integrates useful component functionality into a complete price optimization toolkit. The Rater, Modeler, Simulator, and Optimizer help insurers answer the question: What is the best combination of pricing and marketing actions for my book of business in the evolving competitive environment?

The LexisNexis® Optimal Decisions Toolkit allows the user to

  • Quantify policyholder lifetime value and price elasticity of demand
  • Measure the impact of price changes via multiplicative adjustments, factor tables, or within a complete rating structure
  • Sensitivity-test profit results to changes in assumptions
  • Optimize pricing relativities subject to any number of regulatory, IT, or other constraints
  • Automate and smoothly integrate the results with existing data, archiving, and reporting infrastructure

The Rater is a flexible environment for encoding and evaluating your rate structure, to quickly and easily

  • Compare rerated policies and quotes under legacy, current, or proposed factors, or alternate rate orders of calculation
  • Inspect price disruption on your entire book
  • Trial book migration strategies

The Modeler incorporates a proprietary model form and specialized diagnostics tailored to the unique requirements of elasticity modeling to measure

  • How your book will respond to price changes
  • How varying competitive position and price sensitivity drive segment elasticity
  • What shifts should be expected in the composition of your portfolio at the next rate change

The Simulator allows you to explore the ramifications of price changes on the multi-period value of your portfolio by combining elasticity models with accurate pure premium, expense, and marketing information, to

  • Trial any combination of pricing strategies in an easy-to-use what-if environment
  • Track the impact of price changes on cohorts over time
  • Inspect the results in charts, pivot tables or custom reporting tools

The Optimizer determines the best possible changes to your current pricing structure given your book's current competitive position, price sensitivity profile, and expected costs. You specify your business objectives, constraints, and pricing levers, and the Optimizer will

  • Rank rating variables by greatest impact on your objective
  • Find the best possible pricing relativities which satisfy your requirements

Get it now: For more information about LexisNexis® Optimal Decisions Toolkit, call 800.869.0751.

The LexisNexis® Optimal Decisions Toolkit is made up of the following components:

Rater:

  • Enter rating logic and tables through an easy to use GUI, Excel, or .csv file, or via direct integration with your production system
  • Export aggregated or granular datasets with rerated premiums to a pivot table or database and inspect results in a side-by-side analysis
  • Integrate with the Optimizer for in-place optimization of your rate structure

Modeler:

  • Diagnose your data, examine candidate variables, and train GLM or non-linear elasticity models to predict policy-level conversion, retention, and price sensitivity
  • Train auxiliary GLMs for frequency, severity, pure premium, cancellation, and more
  • Combine elasticity models with the Rater for a probabilistic dislocation analysis

Simulator:

  • Input and document price changes through a flexible interface
  • Leverage existing loss models or incorporate new ones from the Modeler
  • Include custom expense and profit components
  • Incorporate auxiliary GLMs to account for cancellation, cross-sales, or any combination of deterministic or probabilistic events
  • Export granular or summarized predictions to built-in or custom reporting tools
  • Start with the information you have, and refine and cross-check your configuration as new information becomes available

Optimizer:

  • Use intuitive diagnostics to identify 'low hanging fruit' and inspect the shape of the optimization surface.
  • Easily configure any combination of objectives and constraints (e.g. "maximize 5 year NPV subject to annual bounds on volume")
  • Optimize your rate order in-place
  • Run and compare many optimizations in a short period of time
  • Sensitivity-test your results to changes in assumptions
  • Compare the results of optimized pricing scenarios side-by-side with your best guess

Get it now: For more information about LexisNexis® Optimal Decisions Toolkit, call 800.869.0751.

Literature

  1. LexisNexis® Optimal Decisions Toolkit
  2. LexisNexis® Analytics for the Insurance Industry

Get it now: For more information about LexisNexis® Optimal Decisions Toolkit, call 800.869.0751.

Contact Us

For more information about our solutions call 800.869.0751 or contact us online

LexisNexis Optimal Decisions Toolkit does not constitute a "consumer report" as that term is defined in the federal Fair Credit Reporting Act 15 USC 1681 et seq. (FCRA). Accordingly, LexisNexis Optimal Decisions Toolkit may not be used in whole or in part as a factor in determining eligibility for credit, insurance, employment or another permissible purpose under the FCRA. Optimal Decisions Toolkit is a registered trademark of LexisNexis Risk Solutions.

Due to the nature of the origin of public record information, the public records and commercially available data sources used in reports may contain errors. Source data is sometimes reported or entered inaccurately, process poorly or incorrectly, and is generally not free from defect. This product or service aggregates and reports data, as provided by the public records and commercially available data sources, and is not the source of the data, nor is it a comprehensive compilation of data. Before relying on any data, it should be independently verified.

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