AY1516 T2 Team Hew - Overview/Final

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Overview

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Proposal

Interim Review

Final

Objectives

Several changes were made to the Objectives as set out in the Interim Review:

• Business and policy growth would have to be analyzed
• Time Series Forecasting or Prediction would not be carried out due to lack of time and dataset limitations
• No business recommendations will be made, but instead suggestions for exploratory analysis technique and tools, as well as data collection improvements will be given

Research Paper

Initial Abstract

The motor insurance industry in Indonesia is a unique one for insurers. The country remains one of the few Asian countries that do not mandate a Compulsory Third Party Liability (CTPL) for vehicles, which makes retention of customers hard. As a result, motor insurance policies are usually bundled together with a vehicle hire purchase via dealerships or lenders. Premiums of such policies are calculated based on vehicle type, age, brand and region. Indonesia’s motor insurance industry also remains as one of the most competitive, with 81 registered general insurance companies. Regulatory authorities have put in place many policies, including the RBC regime in 2013. Consolidation in the Indonesian insurance market is expected as a result of these regulations. This paper aims to study the impact of these unique market conditions on the profitability of insurance companies in Indonesia, with the period of analysis from the year 2012 to present. A global insurance company operating in Indonesia has provided several years of data to permit exploratory analysis. It consists of two datasets merged together - one for motor insurance customer policy transactions and the other containing claims corresponding to these policies. This paper first looks at general underwriting profitability measures like Gross Written Premiums, and costs like policy discounts and commissions to its intermediaries. Next, these metrics will be further analyzed further by splitting among different customer segments and sales channels. Other interesting trends during the exploratory analysis will also be reported. We hope to unveil the cogs and gears behind the motor insurance industry in Indonesia with the data obtained from one company. However, readers must not assume that it is fully representative of its competitors or Indonesia, so due diligence must be practiced.

The idea of this research paper was to show the uniqueness of the Indonesian Motor Insurance industry, and how insurers can take the appropriate action to improve underwriting profitability based on insights from the data.

Finalized Abstract

We decided to tweak our abstract to showcase the potential of analytics by recommending Tableau as a tool for exploratory analysis and visualizations. We also highlighted how this can be applied to the Indonesian motor insurance industry, citing the merits of Tableau for insurers which are still in the early stages of adopting Analytics in the organization.

Indonesia's insurance landscape has been changing in the recent years with multinational companies holding majority market share. Many market regulations and conditions are also unique to Indonesia, with no mandatory Compulsory Third Party Liability (CPTL) being an example. Multinational insurers might have commonly faced a situation in which data analysis is conducted at regional or main headquarters, and the insights are shared with the Indonesian business unit occasionally through a management meeting, probably using an Excel dashboard. Lack of analytics support and appropriate tools makes it hard to navigate the challenging business environment. This project seeks to help multinational companies operating in Indonesia have a simple yet powerful decision support tool that is easily accessible - an interactive dashboard implemented with Tableau software. This might encourage self-serve amongst employees, lessen the workload of data analysts, and hopefully foster a sustainable culture of analytics within the company.