1.3 Review

Flow Terms

100

Define Quote

a policy and a price is offered to a customer

200

Define Issue

a policy is written and issued with effective date

300

Define New Business

premium we just wrote that we did not write the prior year

400

Define Close Rate/Hit Ratio

% of quotes that were ultimately issued. issues/quotes. Close Rate used in PI, Hit Ratio used in BI

500

Define Yield Ratio

percentage of accounts submitted that we ultimately write. issues/submissions

Equations

100

NBB %

New Business / Base. $ for BI, Policy count for PI

200

PI Growth

(Ultimate Written Policies /     Available Renewal Base ) - 1   

or

( (Ultimate Booked New     Business policies + Ultimate Retained policies ) / Available Renewal Base     count) - 1

300

BI Growth incl. RPC

(WP$ / Base $) -1

or

((NB$ + Renewal$ + RPC$) / Base $) - 1

400

BI Growth xRPC

( (Retention $ + NB $) / Base $) - 1

500

RPC

(rate $ + exposure $ + other $) / retained $

Assembly Line

100

What is AFI

Available for issue. Agent has right to issue without underwriter having to look at the policy.

200

Define Submission

Potential customer asking for coverage; “submitting” their info to us in  hopes of receiving a quote

300

Explain how hard and soft markets likely impact the assembly line

Hard market – declines and referrals likely go up, AFI down, Issued maybe down or if market availability is strained, maybe they go up as all business coming to us?

Soft market, declines and referrals down, AFI up, issued might go up or down depending on how competitive we are

400

What are the 3 possible paths completed submissions go down.

  A – Trigger a decline rule,

  B – Trigger a refer rule, or

  C – go AFI

500

Walk through the assembly line

• Submissions, incompletes (submission not completed by agent)
• Become either AFI (available for issue), reference needed, or auto-decline (declined for UW reasons)
• Some reference-required quotes get abandoned
• Some reference-required quotes are approved, some declined
• AFI issued or AFI not issued 

  

Prod Terms

100

Define Retention %

Ratio of what we kept or retained compared to the total written last year, measured in policy counts in PI & in $ for BI

200

Define RPC

Renewal Premium Change, the change in the amount of premium we retained, usually displayed as a % of Retained $ (may also hear Renewal Price Change)

300

Define Written Policies/Premium

Combination of retained and new business, measured in policy counts in PI & in $ for BI. For BI, WP$  = Retention $ + RPC $ + New Business $

400

Define Growth

Overall change in written policies or premium relative to base (last year’s written), measured in policy counts in PI & in $ for BI

500

Define Base

Total Written Premium (BI) or policies (PI) we wrote a year earlier; our starting point for this year

Tell the Story

100

PI 

Rate Need: +5%

Growth: ??

Retention: 85%

RPC: 5%

NB: 18%

Unprofitably growing by growth of 3% and a rate need of +5%

200

BI

Rate Need: 0%

Growth: -5.8%

Retention: 78%

RPC: 8%

NB: 10%

Profitably shrinking by -5.8%. Impacted by low NB%.

300

PI 

Rate Need: -5%

Growth: ??

Retention: 89%

RPC: 2%

NB: 16%

Profitably growing by 5% with -5% rate need. Driven by strong Retention% and NB%.

400

PI 

Rate Need: +1.0%

Growth: ???

Retention: 83%

RPC: 5%

NB: 12%

Unprofitably growing at 5% with a rate of +1%. Driven by Retention% and NB%

500

BI

Rate Need: +15%

Growth: 13%

Retention: 80%

RPC: 10%

NB:25%

Unprofitably growing at 13% with a rate of +15%. Driven by NB% and RPC%