In Japan's competitive direct auto insurance market, Sompo Direct has established itself as a unique player. Since launching "Otonano Auto Insurance" in March 2011, the company has grown to serve 1.35 million policyholders by delivering straightforward products with competitive premiums through a digital-first approach. However, as market conditions deteriorated and profitability pressures intensified, Sompo Direct recognized the need to fundamentally transform their pricing and data analysis capabilities.
The challenge: Responding to an increasingly complex market environment
As a later entrant to Japan's direct auto insurance market, Sompo Direct has always been laser-focused on differentiation and winning customer choice. When large-scale hailstorms and surging inflation drove vehicle repair costs considerably higher, profitability margins compressed across the auto insurance sector. This deteriorating environment made it critical for Sompo Direct to strengthen its pricing and data analysis capabilities.
The company's existing operating model, however, created significant obstacles. Analysis and system implementation were handled separately, requiring additional time and resources while limiting agility. Premium analysis demanded complex methodologies, yet data limitations forced the team to rely on approximate assessments rather than precise insights. Compounding these issues, departments operated in silos—pricing, marketing, customer service, call centers, and claims each worked with different data sets, making it difficult to develop cohesive strategies or validate hypotheses across the organization.
The solution: Unifying analysis and execution with Radar
Sompo Direct implemented Radar as their premium rating and modeling platform with a six-month timeline to align with an upcoming premium rate revision. The implementation restructured operational responsibilities, transitioning functions previously managed by the IT department to an external system under business division oversight. The team meticulously reproduced existing premium calculations within Radar using identical rates before proceeding to develop models for the following year.
Radar's advanced capabilities enabled Sompo Direct to predict individual customer risks through sophisticated data analysis and reflect these insights directly in insurance premiums. The platform provides comprehensive support across risk analysis, rating decisions, and market development, while strengthening the company's data infrastructure and establishing a foundation for cross-functional collaboration with unified data sets across departments.
The impact: Cultivating a data-driven decision-making culture
The implementation delivered results that exceeded expectations, completing on schedule without major issues despite the transformation's inherent complexity.
Immediate operational improvements
Integrating analysis and execution functions significantly accelerated decision-making, while advanced analysis capabilities with granular data enabled the team to build sophisticated models that were previously unattainable. The product development team achieved substantial productivity gains as tasks previously handled by the system department could now be completed more efficiently within their own function, enabling greater autonomy and faster response times.
"One of Radar's key strengths is the ability to quickly reflect current market conditions in our pricing," noted Fumihiro Yamamoto, Deputy Manager of the Product & Pricing Department at Sompo Direct Insurance Inc. "Because the cycle from consideration to the reflection of rates is now shorter, we have already been able to repeat the cycle multiple times. Through this process, we have steadily built our expertise."
