686 days ago, Seyna obtained its licence to operate as a risk carrier.
Long months of work, supported by our A* team, to get to this great moment: the launch of our insurance company.
Next step: launch our first insurance product! But let's face it: launching a product without data is quite a challenge.
Today, I would like to share with you our journey in terms of pricing. And by doing so, explain how this famous paradox of data and pricing ended up shaping our model and culture.
I) Setting the first price
We were facing a vicious circle. Indeed when you launch a new insurance product, you have no data to build upon, but you also won’t collect any data until it's on the market. So what do you do? Launch using other solutions than your own data.
And for Seyna, in December 2019 these solutions were :
- benchmarks: some public, some done in-house using quote comparison websites or through endless comparisons of offers, guarantees, exclusions, etc. To give you an idea, pricing our first product must have taken us no less than thirty man-days.
- countless discussions with experts: actuaries, sales representatives, TPAs, underwriters, reinsurers. We got the whole value chain involved! "What is the claims-frequency? Which guarantees work? What conversion rates for a given distribution channel? What are the operational impacts for TPAs? What are the omission rates? etc.". Our conviction was that a fair pricing would require a holistic understanding of the risk.
- public data: Official government reports, Insurance Institutions studies, actuarial dissertations, etc.
If we had to do it again, I think we could have gone faster, and accepted some of the uncertainty. But at the time, we needed to know that there was, indeed, nothing left to do but take the leap!
And so it happened. 11th of December 2019, we launched our first ticket cancellation guarantee, not knowing whether our pricing was accurate or not.
But what I perceived as a pitfall then, eventually turned out to be the backbone of our Test & Learn culture. The one that ended up shaping our actuarial and legal framework.
II) Monitor and refine
January 2020, the ball is rolling! With the guarantee on the market, we can finally put our pricings to the test andl refine our assumptions. In this context, closely and frequently monitoring loss ratios ends up being a requirement and a natural consequence. Absolutely central to our modus operandi, we obviously started straight away using this tracking to arbitrate any strategic decision made. What we hadn’t quite expected however, was the impact it would have on our tech roadmap.
In fact, it was our requirement to have such quick understanding of the risk’s evolution that created the foundations of Seyna's technological platform. This platform allows us to follow our programs’ results in almost real-time to quickly make the necessary adjustments.
To sum up, what started off as a dire lack of data ended up being the foundation to our obsession for tracking and risk management.
But risk monitoring is obviously only half the story. Let's take the example of an aircraft radar. It's great to be able to identify turbulence ahead, but without a stick nor a rudder, there isn’t much use in that knowledge. The second part of the battle was therefore to put in place processes that would allow the programme to evolve and change course, contractually..
To this end, we systematically include in our management agreements with our partners the possibility of:
- modifying the premium as soon as the technical balance of the contract is threatened. In order to keep a close eye on loss ratios, Seyna carries out at least one check-up a month. Operating in such a way naturally requires transparency. This is why all technical loss thresholds and their impact are clearly defined at the launch of the new program
- updating the management and claims processes on an ongoing basis. For example, if our partner Dalma, who does Pet Insurance, identifies a claim situation we hadn’t anticipated, they report it to us via a shared Slack channel. The matter is studied and the contracts are immediately updated.
This culture of continuous improvement illustrates, in my opinion, the way Seyna approaches partnerships, be they with brokers or reinsurers. Providing relevant protection for our final policyholders is a work that is done continuously and in co-construction with all the actors of the value chain. We learn and iterate together.
III) Choosing your battles
This approach, however well-defined, is not entirely without risk. If you are going to use a rapid iteration approach, you have to choose a risk that allows it and expand from there. Concretely, at Seyna we chose to start with fast acquisition cycles for which we could limit the amount of unknown factors.
Let's take the example of the ticketing guarantee. We knew that by design this offer would not involve excessive claims. In fact, it allowed us to know almost exactly how much we would have to pay as it is directly indexed on the ticket price. The only unknown was the frequency.
Operating in a context of relatively limited risk also allowed us to undertake more ambitious innovations. Originally tested on travel-related risks, our “Ticketing without supportive proofs” guarantee eventually ended up enabling our policyholders to be reimbursed for part of their event tickets without having to provide any proof. And it works. Developed in close collaboration with our partner Phenomen, this product is now distributed through Ticketmate to cover concerts such as of Ed Sheeran and Mylène Farmer :)
As we grow and our financial strength increases, we are now expanding into new risks with longer learning and acquisition cycles. This is our strategy of expansion by vertical. As time goes by, Seyna will be able to operate on the whole insurance market.
IV) Building trusted partnerships
Finally, I will mention the importance of building quality partnerships with expert companies.
Our ability to launch, price and refine our products also depends to a large extent on the quality of the relationships we maintain with our reinsurance partners - who take on 85% of our risks on average. In order to do so, Seyna has bet on radical transparency.
Indeed, our reinsurance partners have access to all historical data and information at any time via our Reinsurer App. This allows them to forge their own convictions with regard to our assumptions. Giving them this ability to analyse and control reinforces their confidence in Seyna to manage risk or re-price unbalanced programmes.
That's it! I hope this article has given you a better understanding of how we approach pricing at Seyna but also its impact on our culture, our tools and even the nature of our partner relationships.
I would like to end this article by thanking once again all team members and partners who allow us to move forth on this great journey.
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