1. 1 Where Is My Market? Mining Data to Find a Niche Commercial Lines Segmentation Workshop Lisa Sayegh Presentation to the CAS March 2003

2. 2 How? Identify your strengths Map to appropriate market segments Identify high quality prospects

3. 3 Company Strengths Identify areas with performance success – Function within company – Industry-specific (or process-specific) knowledge – Recognition by industry segment – Sales distribution channel Benchmark Identify areas with performance success – Function within company – Industry-specific (or process-specific) knowledge – Recognition by industry segment – Sales distribution channel Benchmark

4. 4 Define and select market segment by: – Industry – Line of insurance – Demographics - geography, sales – Business parameters - size of risk Define and select market segment by: – Industry – Line of insurance – Demographics - geography, sales – Business parameters - size of risk Identify Market Segments That Utilize Your Strengths

5. 5 Assess selected segments – Amount of total premiums – Profitability – Trends – Insurance Concentration Assess selected segments – Amount of total premiums – Profitability – Trends – Insurance Concentration Validate Segment Selections

6. 6 Additional Considerations Cost to sell to market segment Cost to educate market Different regulations New trends to take into account Cross selling Cost to sell to market segment Cost to educate market Different regulations New trends to take into account Cross selling

7. 7 Segment Successes Linking selected segments to agent territories – Overlay agent territory to identified market segment Identified suitable regions for expansion of program Linking selected segments to agent territories – Overlay agent territory to identified market segment Identified suitable regions for expansion of program

8. 8 What Data is Available? Business information Insurance Statistics – AM Best – Property & Casualty Stat Agents – State Insurance Departments Other Insurance Information Business information Insurance Statistics – AM Best – Property & Casualty Stat Agents – State Insurance Departments Other Insurance Information

9. 9 What Data is Available? Cont’d Government information Association information Forecasting News Your own data Government information Association information Forecasting News Your own data

10. 10 Using Multiple Data Sources Are you comparing like for like? – Headquarter vs. location specific – Non-employers – Entire insurance market? Are you comparing like for like? – Headquarter vs. location specific – Non-employers – Entire insurance market?

11. 11 Using Multiple Data Sources How to integrate data across data sources? – Industry identification – Business size – Size of risk – Specific business How to integrate data across data sources? – Industry identification – Business size – Size of risk – Specific business

12. 12 Industry Classifications Standard Industrial Classifications – Over 900 4 digit SICs or industry slices – Primary SIC Replacement - North American Industrial Classification codes – Government information in NAICS only – Industry hasn’t responded yet – Advantage over SIC Standard Industrial Classifications – Over 900 4 digit SICs or industry slices – Primary SIC Replacement - North American Industrial Classification codes – Government information in NAICS only – Industry hasn’t responded yet – Advantage over SIC

13. 13 What’s available - – Aggregated actual performance data used as basis for pricing by insurers ISO collects over 70% of commercial lines market w/o WC; have to be a participant to access Data defined by classification code – Differs by line – Reflects risk What’s available - – Aggregated actual performance data used as basis for pricing by insurers ISO collects over 70% of commercial lines market w/o WC; have to be a participant to access Data defined by classification code – Differs by line – Reflects risk P&C Insurance Profitability Data

14. 14 Actual Insurance Information Insurance performance – Law of large numbers – Actuarial Analysis e.g. development May not reflect entire market for all lines – New lines with insufficient data – Business characteristics may not be available Insurance performance – Law of large numbers – Actuarial Analysis e.g. development May not reflect entire market for all lines – New lines with insufficient data – Business characteristics may not be available

15. 15 Industry Level Data Better Suited For Marketing Data on common level; Compare across lines Drill down capability to new markets Can identify business trends Data on common level; Compare across lines Drill down capability to new markets Can identify business trends Data by Industry needs to be developed; insurance information not available from stat agents.

16. 16 Analyzing With Your Own Company Data Append SIC or NAICS Develop a way to append additional business variables Data that you may already be capturing Append SIC or NAICS Develop a way to append additional business variables Data that you may already be capturing

17. 17 Provide High Quality Prospects Focus in on identified customer characteristics – Premium estimates – Geographic areas – Business size – Corporation Type – Additional data sources for specialty programs Focus in on identified customer characteristics – Premium estimates – Geographic areas – Business size – Corporation Type – Additional data sources for specialty programs

18. 18 Where Is My Market? Mining Data to Find a Niche Commercial Lines Segmentation Workshop Lisa Sayegh Presentation to the CAS March 2003