Learn how to use market research techniques to set fair, profitable, and appealing insurance prices for your target market.

As important as competitive insurance prices are, they are still subjected to cost and risk analysis to be profitable in the industry. A thorough analysis on cost would be carried out on expenses and factor in the risk tolerance level in amount comparable to cost analysis so to determine the minimum price to profit and at worse case scenario, break even. This technique is way better that running loss.

Segment your target market based on factors such as age, location, income level, and risk profile. Understand the unique needs and preferences of each segment to tailor pricing strategies and product offerings accordingly.

What techniques can you use to set competitive insurance prices through market research?

Setting competitive insurance prices is a crucial skill for any insurance provider. You want to attract and retain customers, cover your costs and risks, and make a profit. But how do you know what prices are fair, profitable, and appealing to your target market? In this article, we will explore some techniques that you can use to set competitive insurance prices through market research.

1 Analyze your costs and risks

The first step in setting competitive insurance prices is to understand your own costs and risks. You need to calculate how much it costs you to provide the insurance coverage, including administrative expenses, commissions, taxes, and claims. You also need to estimate how likely and how costly the claims will be, based on historical data, actuarial models, and risk factors. This will help you determine the minimum price that you need to charge to break even and make a profit.

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Yemmie Olaleye (CMSA®, FTIP™) ✪

I help individuals make informed & strategic decisions in the financial market; impacting with charts. Market Analyst| Coach| Mentor| Thought leader| Futurist CFI: FMVA®| CMSA®| CBCA™| BIDA®| FTIP™| FPWM™
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As important as competitive insurance prices are, they are still subjected to cost and risk analysis to be profitable in the industry. A thorough analysis on cost would be carried out on expenses and factor in the risk tolerance level in amount comparable to cost analysis so to determine the minimum price to profit and at worse case scenario, break even. This technique is way better that running loss.

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2 Study your competitors

The next step in setting competitive insurance prices is to study your competitors. You need to know who they are, what they offer, how they price their products, and how they market them. You can use various sources of information, such as websites, brochures, online reviews, industry reports, and mystery shopping, to gather data on your competitors. You can then compare your prices with theirs, and identify your strengths and weaknesses, as well as any gaps or opportunities in the market.

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Jeremy Keating

Author of "Price Writer: The nine-step method to becoming a highly successful general insurance pricing leader" | Founder of Price Writer | Podcast Host | I empower pricing professionals
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Obtaining data on competitor pricing is crucial. In countries where it is legal rates can be raided from competitors by trying out every combination in their rating to get a full view of their rates. In some countries, it is also possible to buy this data either from data providers or from comparison websites.

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3 Segment your customers

The third step in setting competitive insurance prices is to segment your customers. You need to understand who your customers are, what they need, what they value, and how they behave. You can use various criteria, such as demographics, psychographics, geography, lifestyle, and behavior, to divide your customers into different groups. You can then tailor your prices to each segment, based on their willingness and ability to pay, their price sensitivity, and their loyalty.

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Aatur Thakkar

Co-Founder at Alliance Insurance Brokers Pvt. Ltd.
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Segment your target market based on factors such as age, location, income level, and risk profile. Understand the unique needs and preferences of each segment to tailor pricing strategies and product offerings accordingly.

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Jeremy Keating

Author of "Price Writer: The nine-step method to becoming a highly successful general insurance pricing leader" | Founder of Price Writer | Podcast Host | I empower pricing professionals
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Building a predictive model from competitor rating data allows you to predict all the prices that a competitor would charge to a particular customer and understand how your rate strength, that is how much more or less expensive you are than them affects your conversions.

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4 Test your prices

The fourth step in setting competitive insurance prices is to test your prices. You need to validate your assumptions and hypotheses, and measure the impact of your prices on your sales, revenue, and profit. You can use various methods, such as surveys, focus groups, experiments, and simulations, to test your prices with your customers or potential customers. You can then analyze the results, and adjust your prices accordingly.

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Jeremy Keating

Author of "Price Writer: The nine-step method to becoming a highly successful general insurance pricing leader" | Founder of Price Writer | Podcast Host | I empower pricing professionals
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Building demand models that include competitor price models allows you to optimize your prices. The aim is to achieve your objectives in terms of volume, revenue, and margin by not missing out on opportunities and not leaving money on the table either.

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5 Monitor your prices

The final step in setting competitive insurance prices is to monitor your prices. You need to track and measure the performance of your prices over time, and respond to any changes in the market or customer behavior. You can use various tools, such as dashboards, reports, and alerts, to monitor your prices. You can then review your prices regularly, and update them as needed.

Setting competitive insurance prices through market research is not a one-time activity, but a continuous process. By using these techniques, you can optimize your prices to achieve your goals and satisfy your customers.

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6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

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Aatur Thakkar

Co-Founder at Alliance Insurance Brokers Pvt. Ltd.
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Evaluate the perceived value of your insurance products relative to competitors. Consider factors such as coverage breadth, customer service quality, claims processing speed, and brand reputation when determining pricing.

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What techniques can you use to set competitive insurance prices through market research?

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1 Analyze your costs and risks

2 Study your competitors

3 Segment your customers

4 Test your prices

5 Monitor your prices

6 Here’s what else to consider

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