Warranty pricing and reserving analytics

Stay ahead of the competition with an extended 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 warranties incorrectly can impact financial performance.

Priced too low, and your warranty program could be unprofitable. Priced too high, and both your warranties and the underlying products could become unattractive to customers, denting future product sales.

Pricing warranties accurately means accounting for the geographical and product-specific risk factors that affect the reliability of your underlying products. Without this insight, plus a deep understanding of the historical profitability of your warranties, your program risks being unprofitable, misaligned with your sales and risk strategies, or leading to balance sheet volatility because you reserved too much, or too little to meet your liabilities.

Solve your warranty pricing and reserving challenges

To help you get more financial value from your warranty program, we combine specialized actuarial expertise with proprietary software.

Our in-house software solutions ResQ and Radar process huge volumes of warranty data, freeing our experts to focus on analyzing your products and uncovering better performance opportunities.

Our robust reserving and pricing analytics let us quickly assess the impact of different scenarios and stress factors, giving you early warnings on potential vulnerabilities and alerting you to opportunities for greater financial value.

Warranty checklist

Does your current actuarial pricing and reserving analysis identify all the risks and opportunities at stake, or could it be leaving you financially exposed?

Use our checklist to evaluate your existing approach to warranty pricing analytics:

1. 01

   Are you experiencing higher than expected claim rates?

   If so, can you identify the root causes and find effective corrective measures?

2. 02

   Do you understand the financial impact of your warranty program?

   Are you calculating revenue from warranty sales against the costs of claims and administration? Are you able to connect your warranty reserving approach to your warranty pricing to ensure financial stability?

3. 03

   Are your warranty reserving and pricing strategies based on robust data?

   Setting warranty prices without a detailed analysis of risk factors and potential claims puts you at risk of underpricing or overpricing your warranties. Could you refine your pricing strategy to better match the actual risk with more variables and more advanced software to achieve more accurate reserve estimates?

4. 04

   Can you forecast future claims accurately?

   Predicting warranty claims can be challenging, requiring complex actuarial modeling – do you have the right tools and expertise?

5. 05

   Are you making the most of your data?

   Could you gain deeper insights into your warranty program, identifying trends and making data-driven decisions that enhance customer satisfaction and profitability? Are you using your reserve analysis to reveal blind spots or hidden opportunities?

How can we support you in improving warranty pricing?

We use sophisticated pricing models to ensure your warranties are priced fairly and backed by accurate reserving across different geographies and products. We’re focused on eliminating cross-subsidies, enhancing profitability and supporting the effectiveness and efficiency of your warranty program.

We deliver all of this through:

How can you achieve more efficient warranty reserving?

You can free your team from mundane and imprecise spreadsheet-led approaches to warranty reserving and get more accurate insights. With advanced warranty reserving analytics via our in-house warranty reserving software solution, ResQ you can:

• Handle large data sets efficiently, making it easier to integrate data from different products and enable sophisticated pricing and reserving strategies that optimize your warranty program
• Carry out sensitivity testing and scenario analysis, such as assessing the impact of inflation changes
• Adjust your reserving and pricing strategies based on robust data with analytics that identify frequency and severity trends, vulnerabilities and previous blind spots on the potential future outcomes of claims
• Accurately track and analyze warranty claims to understand the underlying factors affecting costs, supporting overall efficiency at the product level
• Gain competitive edge by spending more time analyzing your data than preparing it and enjoy better collaboration through dashboards that communicate actuarial reserving results clearly and compellingly.

How can we support better performing warranty pricing and reserving?

Ready to take more control and get more value from your warranty program? Request a demo of our in-house solutions or speak to our actuarial specialists.