Optimize your warranty program in line with your risk strategy

Stay ahead of the competition with a warranty program that offers more value to your customers and less financial risk to your business.

While warranties are an integral part of many industries, from manufacturing and construction to retail, pricing your warranty incorrectly can impact financial performance. Priced too low, and your warranty programs could be loss-making. Priced too high, and both your warranty and the underlying product could become unattractive.

Warranty program checklist

Could your warranty program be working harder, or is it at risk of leaving you financially exposed? Use our checklist to evaluate your current warranty program and identify areas of risk and opportunity:

1. 01

   Are you experiencing higher than expected claim rates?

   Can you identify the root causes and find effective corrective measures?

2. 02

   Do you have a clear understanding of the financial impact of your warranty program?

   Are you calculating revenue from warranty sales against the costs of claims and administration?

3. 03

   Is your pricing strategy based on robust data?

   If you set warranty prices without a detailed analysis of risk factors and potential claims, you may be at risk of under-pricing or overpricing your warranties. Can you refine your pricing strategy to better match the actual risk?

4. 04

   Are you able to forecast future claims accurately?

   Predicting warranty claims can be challenging and require complex actuarial modeling. Do you have the expertise to forecast future claims?

5. 05

   Are you making the most of your data?

   Could you gaining deeper insights into your warranty programs, identifying trends and making data-driven decisions that enhance customer satisfaction and profitability?

How we support your warranty program

We use sophisticated pricing models to ensure your warranties are priced fairly across different geographies and products, eliminating cross-subsidies and enhancing profitability. We support the effectiveness and efficiency of your warranty program through:

Detailed analysis

We get to know your business and carry out a comprehensive review of your existing pricing models. By assessing your current warranty landscape, we work to identify key areas of financial leakage and opportunities for enhancement. Our approach includes a graphical summary of your loss history, identifying trends and hotspots, drivers of risk and regions or seasonal impacts that could be fueling claims.

Custom dashboards

We can create bespoke dashboard tools to provide you with ongoing, actionable insights into your warranty program’s performance. These tools enable you to make proactive adjustments and improvements, integrating new pricing models and tracking performance by key metrics like premium, loss ratio and business mix movement.

Actuarial expertise

Leverage our deep experience and expertise in risk modeling and software solutions to refine your warranty pricing strategies. We deliver actionable insight and provide ongoing monitoring and maintenance to help you stay in control and optimize pricing effectively.

Improving your risk strategy

Combine the insights with analysis of your other risks to review your entire risk strategy, ensuring your risk spend is efficient and in line with your overall risk tolerance.

Ongoing efficiency review

Reflect emerging trends in claim costs as well as market competition with our dynamic pricing support and advanced software.

Case study: Optimizing a global manufacturer’s warranty program

The challenge

A leading global manufacturer was facing significant challenges with its extended warranty program, which was losing significant sums of money. Pricing was based on a limited set of factors that didn't reflect the current risk landscape and repair costs associated with warranty claims.

The solution

We worked in collaboration with WTW's Affinity Insurance team and the manufacturer to produce a new warranty pricing strategy and updated management information systems. The solution involved several key components:

The outcome

The implementation of the new pricing model and management tools had a profound impact on the manufacturer’s warranty program.

Ready to take more control or get more value from your warranty program? Request a demo or speak to one of actuarial specialists.