Earnix Price-it™ for Insurance Software

Precision Pricing with Analytics

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Earnix Price-it™ Integrated Analytics for Pricing

Comprehensive Analytics, Implementation, and Deployment – All in a Single Environment

The Earnix Price-it platform assists organizations in avoiding reliance on legacy rating engines and disparate analytical tools, which often create unnecessary complexity and errors. Using one integrated platform for data management, modeling, simulation, optimization, testing, and deployment creates efficiency, improves the quality and facilitates collaboration across the organization. Earnix Price-it provides a seamless workflow that improves predictions, accuracy, and decision making for streamlined business processes and improved organizational performance.

In today’s competitive market, ratemaking sophistication is critical to insurers’ continued growth and profitability. Techniques to predict actuarial costs have become table stakes, and more advanced predictive and prescriptive analytics practices are becoming more widely used in pricing.

With an avalanche of new data sources and innovative modeling techniques such as machine learning, insurers need a holistic pricing strategy and an advanced analytics system that will provide decision support for ratemaking. Earnix Price-it™ is an integrated analytics and pricing platform used for almost two decades by insurers around the world. Backed by data scientists and analytics professionals that are experts in financial services, Earnix Price-it for home, auto, health & life, and small commercial greatly enhances insurers’ ability to accurately predict outcomes, achieve business targets, and improve speed-to-market agility.

Earnix Price-it allows the pricing function to be operationalized and thus integrated into the overall business process with other departments, including marketing, sales, product management, risk, underwriting, claims, etc.

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The Need for Speed in Decision Making

Earnix Price-it greatly enhances insurers’ ability to accurately predict outcomes, achieve business targets and improve speed-to-market agility

Earnix Price-it Provides Analytical Speed and Flexibility

With Earnix Price-it, organizations can execute changes to decisions regarding price in a fast and reliable way, with a new level of speed and agility. Pricing strategies can be created in a well-structured manner, enabling quick and efficient deployments. Users can execute and monitor multiple pricing structures and strategies with high performance and reliability. The software allows multiple scenarios to be developed, presented, and compared in a rapid fashion. All stakeholders have access to a dashboard with metrics resulting from these potential changes so the impact can be communicated quickly throughout the organization.

After the initial integration is complete, the analytics professionals at your organization will have the expertise to operate the system on their own – whether it is creating and deploying pricing schemes, updating models, or running analytical optimizations. The freedom and flexibility to operate the system is yours – without continually depending on outside consulting resources. As a pricing professional, you will have the speed and flexibility to produce recommendations that the organization needs for improved decision making.

Analytical insight is the new competitive advantage. With vast amounts of data being available from both internal and external sources today, specialized methodologies that improve analytical precision differentiate organizations and drive their success. Earnix Price-it enables the shift from diagnostic and descriptive analytics to advanced predictive and prescriptive analytics, providing the sophistication needed to succeed in today’s hypercompetitive marketplace.

Designed for Organizations at Any Level of Sophistication

As a flexible and integrated pricing system, Earnix Price-it can help companies at any level of analytic sophistication to leverage industry best practices to determine the right pricing strategy. From the novice user who is performing basic simulations, to those organizations implementing multiple complex optimization scenarios based on machine learning models, Earnix Price-it can support organizations all along this spectrum. With Earnix Price-it, organizations can easily deliver to the market changes to rates, rating structures, and the underlying models – as well as monitor resulting impacts with speed and agility, all via a single software solution.

Analytics Fuels Marketplace Differentiation

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Deep Financial Services Industry Knowledge- The Earnix Advantage With hundreds of projects completed, Earnix consultants can provide advice on the best strategic uses of predictive and prescriptive analytics to improve business outcomes. Their perspective includes deep experience and understanding of the industry, including regulatory and risk implications.

To ensure results delivered are in line with goals, Earnix team members work side-by-side during projects to build and test models, train personnel, and share best practices. Once completed our team continues to support throughout the life of the project, ensuring analysts receive the results they desire. This continuity and consistency in consulting throughout the life of the relationship is just one value add that our customers enjoy.

Earnix Price-it’s enterprise architecture provides a simple, scalable, and secure environment inside of Amazon Web Services (AWS) where users across departments can collaborate to make better and faster business decisions.

Simple: With quick deployment and easy access to the environment, users create and/or modify analytical projects without the need of IT assistance. Cloud environments can be updated quickly by our professional services teams in a matter of days, not months.

Scalable: With cloud deployments hosted on AWS, the software can automatically scale as needed while providing a high level of resource elasticity and system flexibility. AWS technology allows for redundancy and resiliency as needed, while providing high reliability and uptimes, so that all users need to focus on is their analytical work in Earnix Price-it.

Secure: Through the AWS platform, Earnix Price-it adheres to all major international cloud security standards and protocols. These enterprise grade security protocols include ISO 27001 (Information Security Management) and ISO 27018 (Protection of Personally Identifiable Information (PII) in public clouds acting as PII processors).

Modern, Cloud Based Enterprise Architecture

“Over the past fifteen years, we have worked

with leading insurance organizations around

the world to solve their toughest business

challenges. Our expertise and know-how

allow us to be trusted advisors, and partner

with them in tackling topics surrounding

how to leverage data & analytics to address

actuarial risk estimation, predict customer

behavior, and design effective pricing

strategies .”

- Reuven Shnaps, PhD

Chief Analytics Officer, Earnix

Traditional Emerging

Earnix Price-it: Typical Use Cases

• Predicting claim costs

• Understanding customer response to price

• Calculating dynamic customer lifetime value

• Deep segmentation of customers

• Predicting behavior propensities – conversion, retention, cancellation, and cross sell

Rank Optimization: Determining competitor prices via machine learning techniques and then using that information to inform placement on insurance aggregator portals.

Real-time Price Tuning: Continuously ensuring that the pricing strategy meets business targets – by automating updates to the pricing strategy deployed in line with business objectives.

Personalizing variables in addition to Price: Working with other Earnix Products to understand customer propensities relative to offered products, bundles, rates, and coverages.

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Today’s pricing process is dependent on a patchwork of tools and systems that restrain responsiveness to market changes. Simply put, these methods restrict competitiveness. After a robust and sometimes lengthy process to develop pricing schemes and get regulatory approval, insurers cannot afford another long and protracted process to test and deploy those pricing strategies.

Improved business outcomes are the result of the ability to respond to market conditions with more dynamic rates, rating algorithms, and underwriting models. Robust and affordable platforms create better models that can be deployed and adjusted faster, all improving sophistication. Earnix Price-it puts actuaries, pricing and product managers in control – and removes the IT translation process to improve quality and accelerate execution. Testing and deployment occurs in a matter of days – not months. Financially, deploying the most advanced pricing scheme and associated quotes in real-time helps achieve volume and/or profit goals more quickly and efficiently than batch style processes.

Earnix Price-it Process Overview

With Earnix Price-it’s ability to import data from a variety of different formats and sources, actuaries can more efficiently manage and prepare insurance data for modeling and analysis:

• Data (first party, third party, streaming, etc.) can be uploaded, appended, and transformed in just a few simple steps so there’s no need for external tools or for creating custom processes.

• Calculations can be done within the software so there is no need to export data once uploaded – creating a more efficient data preparation process for modeling.

• Data types can be easily specified and revised.

• Sample data sets can be created to validate model accuracy and fit.

• When manipulating data, scripts can be created and copied between samples for reusability.

The Key Benefits of the Earnix Price-it Solution

Data Management

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Understanding the frequency and severity of policyholder claims is key to driving profitability and margins, as well as overall organizational success. Earnix Price-it facilitates simple, flexible, and comprehensive model building at any level of risk sophistication.

Earnix Price-it’s demand modeling capabilities allow organizations to more intimately understand propensities for new business, renewals, and mid-term cancellations. The ability to understand this demand influences downstream sales, marketing, and business forecasting decisions. Customer demand can be calculated down to the individual level and using single profile analysis, demand curves can be viewed for each policyholder. Earnix Price-it also allows organizations to augment demand models with competitive information and statistical tests –resulting in more robust models and a deeper understanding of the factors and variables that will improve retention, migration, loyalty, and growth.

For Earnix Price-it users interested in leverage machine learning capabilities, Earnix provides an Integrated Machine Learning™ capability which vastly improves the precision of advanced predictive analytics, while automating and speeding time-to-market decision making. Earnix Price-it allows organizations to take machine learning models from the data science laboratory and quickly place those into production.

Earnix supports both native creation of machine learning models within Earnix Price-it as well as fully-embedded integration with external machine learning environments. Machine learning models currently supported for creation and import include:

• Generalized linear modeling (GLM)

• Random forest (RF)

• Gradient boosted modeling (GBM)

• XGBoost (GBM framework)

Organizations that are advanced users of machine learning and have developed their own machine learning model objects and libraries can easily import them into Earnix Price-it. Models created in DataRobot or open source platforms such as H2O can also be imported easily. This enables organizations to complete the entire machine learning model lifecycle within Earnix Price-it – with enterprise-grade capabilities and at a mass level of production.

Earnix Price-it provides both a granular and graphical view to individual

and factor optimization.

The Earnix Price-it Reporting Module provides detailed reporting on the KPIs and metrics that

matter most to your organization.

Advanced Modeling Capabilities

Modeling for Risk and Demand

Earnix Integrated Machine Learning™

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What-if simulations allow testing and comparison of multiple “one against many” optimized and non-optimized rate scenarios. Results of these analytical simulations help organizations determine the “efficient frontier” - i.e. the optimal trade- off between volume and earnings - is clearly displayed in custom-designed or standard reports. Those include graphs, tables, and maps. Detailed insights can be gathered by further drilling-down and filtering features.

Earnix Price-it offers the following optimization types:

• Individual: The software enables constraints to be set on individual policy premiums.

• Rating Factor: For companies using rating algorithms, Earnix enables constraints to be set on the factor level, to ensure all outcomes are within loss cost indications.

• Rate Sheet: The Discrete Optimization Solver algorithm allows organizations to optimize rating tables that include multiple variables where the relationship between variables is critical.

• Multi-policy: Optimizations can be run for multiple products and rating structures concurrently.

Earnix Price-it optimization module capabilities include:

• Easily solve for alternative objectives such as profit, retention or premium

• Apply multiple constraints in a scenario concurrently

• Apply monotonicity constraints to ensure a certain relationship among prices

• Constrain and optimize the portfolio over on a multi-year basis

• Create the efficient frontier using a variety of user defined target metrics reflecting volume or profit

• Document and export pricing versions directly from the graphical user interface.

• Instantly project the volume/profit tradeoffs of alternative pricing scenarios

• Quickly drill-down to understand results by customer segment

• Change the rating algorithm and understand the potential impact

• Perform multi-year projections

Earnix Price-it What-if Simulations enable the pricing professional to• Compare multiple pricing scenarios side-by-side to

understand factors such as actual vs. expected values

• Easily change assumptions about the mix of business and simulate the result and impacts to premium and gross written premium

• Visualize results for rating committee meetings or for better collaboration with stakeholders

Earnix Price-it enables organizations to perform either individual or rate sheet/rating factor optimization, while also recognizing both business and regulatory constraints.

Earnix Price-it makes it simple to rerate in-market policies or quote data using a variety of pricing assumptions. The software brings together models for loss cost and customer propensities, enabling refined estimates of what will happen before rates are deployed to the market. Our patented optimization algorithms allow the user to quickly

calculate pricing schemes while setting constraints on the overall premium or factor level. Earnix Price-it also makes it easy for the outcomes and potential impacts of these changes to be effectively reported on and communicated to relevant parties across the organization.

Decision Support – What-If Simulation and Decision Optimization

Modeling for Risk and Demand

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• Enforced access rights with full logging and auditing of the deployment process.

• Organization-defined pricing rules control which version is used for which channel(s), region(s) and brand(s).

Accuracy & Control Features

• Easily-deployed champion challenger scenarios.

With online price execution, Earnix Price-it offers a more efficient and accurate pricing process as well as faster time-to-market. After the initial integration, the deployment process is fully controlled by users, with limited involvement by IT, and prices can be deployed in a matter of days, not weeks or months.

The Online Price Execution Module enables testing of pricing versions by automatically deploying them to a pre-production environment and running automatic testing scripts. Once defined thresholds are satisfied (e.g. response time), the pricing version goes through an admin-defined approval process. Then, it is deployed to the run-time environment in a sequence that requires no downtime (see example below).

Executing Price Changes into Online Channels

Discrete Optimization Solver

Pricing Delivery – Real Time and Online

The Discrete Optimization Solver algorithm allows organizations to optimize rating tables that include multiple variables where the relationship between variables is critical, but where discontinuities, or gaps in the demand function exist.

Using discrete optimization, more advanced scenarios can be completed, multiple dimensions can be accounted for in monotonicity problems, and better optimization results can be achieved against more complex data sets. Additionally, discrete optimization allows users to scale the data size and complexity of rating factor optimization (RFO) scenarios, including the size of the optimization problem and number of constraints.

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Earnix Price-it is a real-time pricing and rating system with the highest degree of scalability and reliability. Scaling up to millions of quotes per day, the system easily connects to both front-end systems and rating engines.

The main functionalities of the real-time component include the ability to return any parameter calculated and requested, such as premium, conversion probability, and discounts. The engine can formulate complex price rules using a mixture of random and non-random allocations. A history of all pricing rules is also maintained for internal control purposes and also so that rules can be edited and versioned for future use.

The real-time component of Earnix Price-it helps manage complex pricing schemes and models across different channels, brands and regions. For governance, pricing delivery into real-time channels – whether web, call center, or other – is highly-managed and controlled during testing, deploying, and monitoring. To facilitate workflow and systems integration, the Earnix real-time environment includes a front-end connector that can connect via web service (REST, SOAP) to standard rating engines or other systems. This allows the real-time engine to easily plug into web or call center channels and applications.

Real-Time Pricing and Rating Engine: Millions of Quotes per Day

Managing the Real-TIme Pricing Process

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Earnix Labs is a new version independent module that is included with Earnix Price-it that delivers the newest and latest cutting edge analytic abilities to users of Earnix. Abilities included in Earnix Labs are algorithmic, machine learning, and other advanced analytics techniques that have been developed and tested by the Earnix Research team. By placing the newest functionality into Earnix Labs, customers can test and determine what new functionality they can adopt that will work best in their respective environments. What is available in Earnix Labs is always being augmented and improved. New algorithmic features found in Earnix Labs include:

• Hybrid Modeling – using machine learning techniques like GBM combined with GLM, to allow for the monotonic, continuous, smoothing effect of variables.

• High cardinality – having the ability to account for high cardinality attributes for predictive model purposes.

• Automatic Variable Selection for RFO – having the system automatically select the best variables for use in the creation of a rating structure.

Earnix Labs also allows the addition of new scripts that are non-release related into the Earnix Price-it environment. These scripts are written by Earnix Professional Services and are based on Earnix research, practical experience, and best practices.

Earnix Price-it automates manual processes with a JavaScript based console. Analysts can create programs, via a series of code snippets, in wizard-driven fashion. It also automates tasks, programs, and processes executed on a frequent basis. Earnix’s library of JavaScript methods provide an out of the box ability to automate many tasks, such as updating pricing projects, refitting models, or creating project hierarchies and structures. These activities also can be saved and reused – allowing for continual refinement.

Automation (SDK)

Earnix Labs

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“We like the flexibility, functionality, and ease of use of the Earnix Price-it solution. We like that Earnix is very interested in transferring knowledge and know-how into an organization like ours.” – South American Earnix Customer

724

Earnix teams operate 24/7/365 to support mission critical systems. Our center is continuously staffed, and problems typically are resolved within 24 hours or less. Featuring a resolution rate of close to 100%, experienced engineers delight in quickly resolving issues.

Additionally, Earnix’s Network Operations Center (NOC) provides 24/7/365 system support and oversight to Earnix Price-it environments. These environments are constantly monitored from a trending and system health perspective. The Earnix Price-it architecture thoroughly supports the maintenance and audit requirements of the highly-regulated insurance industry.

Uses outside of pricing include automated underwriting performance and management, customer lifetime value scoring, and solving for other various customer and business variables. Each of these use cases leverage the advanced analytics of the Earnix Price-it software in new and innovative ways. Earnix Price-it supports many types of insurance - including personal and commercial lines as well as life and health.

Best-in-Class Support Services Beyond Pricing

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The Earnix Promise

We believe that for Insurance and Banking Institutions, personalization is key to increased customer satisfaction and loyalty as well as to improved business results. Recognizing the complexities of financial products, Earnix provides an end-to-end Pricing and Product Personalization Software Suite, driven by world-class data science, analytical modeling tools, and integrated machine learning.

The Earnix 3D Personalization Suite™ empowers Financial Institutions to offer the right product, at the right price, at the right time, while optimizing business results, maintaining governance & compliance, and improving the enterprise-wide pricing and product personalization process.

Earnix is a banking and insurance software company that has been consistently innovating for Banks and Insurers around the globe for over 18 years. We have offices in the Americas, Europe, Asia Pacific, and Israel.

Corporate Headquarters4 Ariel Sharon St Giv’atayim 5320045 ILTel. +972 3 753 8292

US Headquarters470 Atlantic Avenue, 4th floor Boston, MA 02210Tel. +1-203-557-8077

UK OfficeWarnford Court 29 Throgmorton Street-London, EC2N 2AT Tel. +44-20-7947-9597