Rating Homeowners Insurance Case Study
Learn how one carrier grew significantly while maintaining rate adequacy in storm-prone zip codes.
This carrier recognized they had quality properties that performed well over time despite severe storm activity. The team sought to grow the book responsibly by writing quality business in a hard market.
Using CAPE property attributes to find homes without roof damage from wind, hail, and heavy rain, and with low risk that they would be damaged in the future, enabled them to offer competitive pricing to well-maintained homes.
Using CAPE to uncover these “diamonds in the rough” enabled the carrier to expand its book profitably by identifying high-quality properties:
- Upon implementing CAPE variables within their model, the carrier selected high-quality properties that did not merit higher factors for storm, hail, and wind perils, even in challenging ZIP codes. By maintaining rate adequacy while offering competitive pricing, they increased market share in a sustainable way.
- They also applied CAPE attributes to existing business to model which homes were likely to continue to perform well and adjust pricing curves accordingly, increasing retention of quality business.
- Independent agents were empowered to provide attractive quotes, helping close new business and improving customer satisfaction.
We showed our pricing actuaries that we can write high-quality business at adequate rates, even in a hard market. Offering competitive rates helped win new business and increased satisfaction with independent agents and personal lines customers.
Homeowners Product Manager, Regional Carrier
As severe convective storms grow fiercer, many carriers see more damage related to the roof, with roofs in poor condition damaged by hail. In addition, property features like tree overhang increase the risk these roofs might be damaged in the future, so carriers should be charging more rate accordingly. The carrier modeled roof condition rating and saw clear improved segmentation.
In further testing, the carrier found even greater lift by integrating attributes from CAPE Property Intelligence—roof age, tree overhang, and roof material—into its own models. The carrier filed these model changes across its footprint, taking advantage of CAPE’s extensive regulatory approvals across the U.S., both from CAPE models directly and other carriers already using CAPE in rating.
Many CAPE clients successfully follow this approach to rating:
Some data providers offer a black box score that carriers can’t integrate into their rating plan. CAPE’s flexible approach allows carriers to choose the components most applicable to their market and easily explain them to state regulators.
Interested in learning additional ways to implement CAPE Property Intelligence to improve rating adequacy? Visit our Rating Use Case page for a full overview.