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Insurance portfolio management

Our research and experience demonstrate that active portfolio management has a material impact on profitability, something that advanced data and analytics puts within reach of more insurers and syndicates.

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What is portfolio management?

‘Active portfolio management’, as we prefer to call it, is about how a business pro-actively manages its portfolios to deliver against its business plan. There are three essential building blocks:

  1. Identifying the portfolios: Identify meaningful dynamic/fluid groupings of risks that can be analysed in depth so that drivers of performance and be identified.
  2. Informed and agile management: Management actions (strategy, pricing, underwriting, etc.) must be informed by good quality (insightful, relevant, timely, well governed) data and analysis. Effective management also requires speed or agility, that is, how quickly can the organisation identify and respond to issues in the portfolio.
  3. Making it active: A framework for proactively looking for opportunities as well as issues (which requires intelligence, be that human, market or artificial), cascading a strategy into a detailed action plan, and then executing against it quickly.

An organisation with effective portfolio management will have a plan for each of the portfolios. This will have been subject to scenario testing, sophisticated analytical and stochastic modelling techniques, and will align to the business plan. All this will be backed up with appropriate monitoring.

The way that portfolio management is deployed not only brings together all the functions to ensure an integrated strategy, but ensures that any deviations from plan are identified and understood quickly, so that fast management action can be taken. The accountability for managing the portfolio should be vested with the right individual in the organisation, who has the skills and authority to bring everyone together. This includes the ability to recognise and communicate the potential implications for capital management. All this is underpinned by high quality data and analysis.

The five key steps of portfolio management

  1. 1. Develop strategy

    How to achieve business objectives in terms of underwriting, pricing, claims, reserving, data (etc) strategies

  2. 2. Create detailed plan

    Aligns with top-down objectives and strategies. Data quality is combined with experience and judgement. Granular segmentation, wide engagement and scenario/impact testing.

  3. 3. Implementation

    Communications to underwriting, pricing and claims, and with IT and data supporting rapid deployment and cycle times. Issues are identified quickly through AvE monitoring.

  4. 4. Performance management

    Data strategy is critical, and there is regular, automated MI production. There is a self-service data exploration dashboard environment, and strong governance forums.

  5. 5. Portfolio steering

    Reviewing results while looking for opportunities and issues. Mix dialled up and down through levers or rate, retention and new business. Influence over underwriting and pricing (direct), and reserving and claims.

Why is portfolio management important?

Portfolio management helps insurers to systematically improve different parts of their book. This enables them to not only fix issues, but to build outperformance and prevent new issues arising in the book. This typically translates to upper quartile combined operating ratios, with the competitive advantages that confers.

Portfolio management can have a significant impact on the performance of a business. Based on a benchmarking study conducted by us in conjunction with the Corporation at Lloyd’s, top quartile performers in portfolio management were able to achieve significantly lower loss ratios (56% vs 65%) and combined operating ratios (98% vs 106%) when compared to bottom quartile performers.

How can we help?

From our benchmarking survey, we saw that organisations are at different points in their relative maturity and therefore the next steps will vary accordingly. We believe there are three main stages along the journey of improving portfolio management:

  1. Diagnostic: Understanding your organisation’s portfolio management maturity relative to the market and/or best practice, and the opportunities to improve
  2. Develop: Make key improvements to your portfolio management approach and capability
  3. Deploy: Implementing cutting-edge tools and software to bring it all to life

At each stage, we bring together our leading-edge thinking, in-depth benchmarking data, and market-leading software tools to deliver bespoke, cost-effective solutions:


Portfolio Management Capability Assessment

We partnered with Lloyd’s to conduct the portfolio management benchmarking study.

We can similarly help you assess your portfolio management capability across a range of attributes and dimensions, such as skills, tools, mindset, and aptitude. This will identify the key opportunities for you to focus on next.

Portfolio Strategy

A clearly articulated portfolio strategy which documents the risk appetite, detailed portfolio development plan, and how adherence to (or deviation from) the plan will be monitored is a critical foundation for effective portfolio management.

We can help you determine a comprehensive portfolio strategy so that you can best meet your company’s objectives.

Once the strategy has been developed, we can also provide advice to help ensure the strategy is cohesively and effectively deployed within your organisation.

Information Dashboards (Radar)

A portfolio manager needs access to a wealth of information at their fingertips to be able to effectively make decisions on portfolio mix, remediation and strategy.

Our Radar suite (Base, Dashboard) provides powerful management information to support portfolio monitoring and rate setting. This includes flexible scenario testing and price optimisation capabilities, helping you extract maximum value from your predictive models to make successful business decisions – with speed.

Pricing Sophistication Assessment

Having an appropriate level of sophistication in your pricing models enables you to steer portfolio strategy and support better underwriting decisions.

We have developed a pricing sophistication framework which we can use to assess your organisation’s capability and identify opportunities for improvement.

Pricing Sophistication

As the market modernises, more sophisticated data-driven pricing models are becoming increasingly important to stay competitive (and at a minimum, avoid anti-selection).

We are experts in insurance pricing and can help you develop your pricing models using the latest cutting-edge analytical techniques.

Pricing Sophistication (Emblem, Classifier)

Our Emblem and Classifier software allows you to rapidly fit predictive models, enabling you to set prices based on a thorough understanding of risk and policyholder behaviour (purchasing, retention and conversion). This integrates seamlessly with Radar which can help you determine your optimal pricing strategy which can then be deployed real time in Radar Live.

Benchmarking with the WTW Best Practice Pricing and Underwriting Framework

We have worked with all the largest global insurers on differing improvement programmes.

We have formalised our insights into a BPPU (best practice pricing and underwriting) model that is market leading in this field. This proven framework acts as the cornerstone for identifying best practice in identifying, delivering and prioritising activity.

Training/Capability Build

Having the right expertise at all level is a key differentiator between emerging and out performers in portfolio management.

We are established experts in best practice portfolio management, and can run training courses to build key portfolio management capabilities in your business.

Price Deployment (Radar Live)

Pricing sophistication and responding quickly to portfolio issues are both key to effective portfolio management.

Radar Live is a sophisticated rating and rules engine that works in partnership with traditional policy administration systems. It allows prices and rules developed in Radar Base to be deployed directly to a rating system and calculated in real-time.

Data Strategy

The use of data is becoming increasingly important for insurers and syndicates in the modern market and is a core component of the Future at Lloyd’s.

We can help you develop a comprehensive data strategy using our proven framework that is underpinned by our insights from working with many leading insurers in the past.


Unify automates and governs the end-to-end financial modelling and reporting process by integrating multiple software applications into user-defined workflows. This helps ensure that your portfolio is managed coherently across the business.

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