An Analytical Approach to Determining Customer Value in the Property and Casualty Insurance Industry

The traditional actuarial focus has been to price with an eye on profitability over the next six to eighteen months. However, most corporate goals contain a desire for long-term profitability. This can create a disconnect between the prices charged by insurers and the long-term goals of the company. This paper will explore the components of customer value and how actuaries and analysts can use this information to make more profitable short-term decisions.