How ABC Reinsurance Transformed Its Pricing Process with SLOPE

“There’s more faith in the results of the model now…Everything is being modeled exactly as it should be.”

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Note:
Due to strategic, legal, and competitive sensitivities, we’re presenting this case study without our client’s corporate name.

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ABC Reinsurance works with the world’s leading insurance companies to help them execute comprehensive, transformational solutions for legacy Life & Annuity and P&C lines. At the heart of the company’s reinsurance transaction process is their pricing team, and their Pricing Lead saw an opportunity for growth. While their Excel-based model had served their team in earlier stages of their company, it was clear that they needed a new solution.

Model Governance Headaches

Before SLOPE, the Pricing Lead’s team managed their models in Excel. While they had unlimited flexibility with it, the platform wasn’t without its drawbacks. “You can do anything in Excel, but it comes at the cost of time. If your model takes half a day to run, there’s no chance to iterate. If you don’t get it right, you have to pick it up tomorrow,” they share.

Over time, the team continued to build out functionality. But without built-in governance functionality, Excel allowed process debt to quietly build up. “The model’s upkeep often fell behind because it was too easy to make quick fixes without actually updating it. We developed a significant backlog of work to just set up a model run; one additional step before runtime eventually snowballed into 10 or 12,” they add.

Keeping track of changes to the model itself posed a significant challenge as well. “Excel unfortunately has a lot of doors that can be opened for people to fiddle and tweak things without others knowing. If you change a cell in Excel, it’s really difficult to see, even with the Compare function,” they share, “We needed to see those changes and have a clean and documented trail.”

Structure Without Sacrifice

All-In-One Platform

When the Pricing Lead and their team began to assess platforms, they found that while most options had their drawbacks, SLOPE delivered on all of the functionality they needed. “One platform was an empty interface with nothing built out. Another might have had the functionality there, but we needed to go digging for it. I can do everything I need in SLOPE,” they note. And when it came time to put a few to the test, the difference between cloud native and legacy vendors was apparent – the downloading, storing, installing, and running of on-premise software significantly slowed down the Proof of Concept process for the Pricing Lead’s team. “We wanted to push towards cloud-based and not have to install a suite of things. SLOPE, being cloud-native, let us get in instantly,” they recall.

Streamlined Processes

With SLOPE, the Pricing Lead found that the challenges with governance their team had experienced before quickly disappeared. Model development and management capabilities of the platform have streamlined their processes. “We have a more unified approach to transactions now,” they share, “With SLOPE, it’s easy to update the template model and keep it in line with new practices. We have more deliberate discussions of, ‘Should this change get worked into the template, or is this a one-time thing?’” With just a few months of dedicated development, the Pricing Lead’s team had stood up a working version of their Excel model in SLOPE, eventually going on to pass their company’s internal risk assessment and certification with flying colors.

In addition to their own company’s standards, the Pricing Lead noted that the platform’s functionality has helped them more easily adhere to their regulator’s: “The BMA has some requirements around the quality and consistency of data that are met with SLOPE’s governance tools – it’s easy to meet those requirements with the data auditing functionality that’s in place.”

Increased Confidence in Model Results

Full Transparency

Beyond governance and audit improvements, SLOPE has helped the Pricing Lead’s team to better understand the flow of data through their model. “There’s more consistency of analysis now. We’re able to see exactly what changes caused what results,” they say. The built-in reporting that gives them instant analytics from model runs and change management tools enable their team to quickly uncover what they need.

Scalability

Because of the cloud-native nature of SLOPE, the Pricing Lead is finding that they’re able to run a lot more compared to their Excel days. They share, “The Excel model was linear; if I wanted to double the policy count, the runtime would go up equally. With SLOPE, there’s some more setup time but the runtime doesn’t increase nearly as much. I also used to have to worry about inputs and file sizes bogging down my runtimes, whereas with SLOPE, that’s just not a concern.”

Going from A to Z

This results in more time for their team. With that extra time, they can afford to build more precision into their model. “Our lead time might be about the same as before, but we’re packing way more in. We’re taking fewer shortcuts and doing fewer simplifications. Instead of just doing A, B, and C, we’re going all the way from A to Z. It’s enhanced the team’s analysis ability,” they say.

And with that increase in precision, there is an increase in confidence in their model results. “There’s more faith in the results of the model now. Of course, those results have been validated and gone through the review process, but there’s more confidence in the model and its consistency. Because there are fewer approximations within the model, everything is more exact and detailed in SLOPE. Everything is modeled exactly as it should be.”