Pricing Adequacy

A GLM pricing model scores each policy with a predicted pure premium, what the policy should cost based on its risk profile. Comparing that against the actual premium charged reveals pricing gaps. Red dots are underpriced: the insurer charges less than the model says is needed. These represent the highest risk to portfolio profitability.

Predicted vs Actual Premium

Points above the diagonal are overpriced (good); below it are underpriced (risky).

Assessment Split

Share of policies by pricing assessment.

Adequacy Ratio by Age Band

Ratio > 1.0 means the model requires more premium than is charged. Higher bars = larger pricing gap.

Adequacy Ratio by State Risk Group

Geographic risk groups ranked by the gap between required and charged premium.

Top 20 Most Underpriced Policies

Policies where the gap between required and charged premium is largest, priority candidates for re-rating at renewal.