Part Seven: Disguising your program design
From The Original Insurance Wiki
Part Seven: Disguising your program design
As PPA auto insurance has increasingly become a commodity (especially low limits policies purchased to meet financial responsibility laws), the marketplace has become more competitive than ever. Because most insurance rating data must be filed with state insurance regulators, it generally becomes a matter of public record.
If you want to know what your competitor is doing, you can simply drive to the Department of Insurance and, for a fee, get a copy of their filing. Independent agents are also a good source of information about competitors’ programs. In this “nothing is a secret for long” environment, there are still some things a company can do to disguise its program design.
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[edit] Protect MVR , Claims History and Credit Score Data
When a system includes a component to order and analyze third party reports, the “raw” data returned from the third party supplier should not be displayed to the user, whether the user is an agent or consumer. Instead, these reports should be analyzed in the background with only the final attribute set being displayed. There are a couple of important reasons for doing this:
In an independent agency environment, you do not want MVRs or other reports paid for by your company used to submit business to a competitor. Systems displaying raw report data make this possible—an agent can simply print the report and then use it to quote and issue in another carrier’s system.
Companies can disguise their reconciliation rules by displaying only the final attribute set to the user. If both the raw report and the final attribute set is available, it becomes a straightforward proposition to reverse engineer this logic.
[edit] Hidden vehicle treatment
Many pricing and underwriting distinctions are based on characteristics of the vehicles insured. Some vehicles are surcharged, some discounted, and some will either qualify a policy for or exclude it from certain underwriting tiers (as in our original Acme Insurance example).
Companies need to disguise their special handling of vehicles. It is still common to see POS software display a list of vehicles and asking the agent if any vehicle on the policy appears on the list. By answering “yes”, the policy is priced or underwritten differently. The list also makes it easy for competitors to evaluate and price against such a program.
To disguise vehicle treatment, a good system will hide surcharges or discounts behind the scenes either by appending records to an existing symbol file or by adding additional tables cross-referenced to the make/model lookup.
[edit] Modify results after repeated requiting
One of the ways insurance companies gather market intelligence is to acquire copies of competitors’ rating software. Especially in the independent agency market, this can be easy to do—a friendly agent lets the marketing rep copy the software. Company personnel will then run the software and compare results to its own program. Enterprising marketing reps have also found ways to access web-based rating systems for “research”.
Because of the way insurance programs are structured, home office personnel running another company’s software will usually produce a quote, then repetitively modify one variable at a time and chart the results. This is done in an attempt to reverse engineer the competitor’s rating algorithm.
To protect themselves from such attempts, companies can set their rating software to begin returning inaccurate results after a certain number of quotes with similar inputs are run in succession.
The exact rules used to determine “unauthorized use” vary widely, but are intended to address only situations that an agent conducting legitimate business will not trigger. When the “unauthorized use” rules are triggered, subtle pricing differences can be presented to the user, frustrating the reverse engineering attempts.
[edit] “Red herring” questions
Some companies will intersperse a few extra questions among the valid ones in their quoting/rating systems to throw competitors off the trail. These questions ask for information that appears to be relevant, but is not actually used by the company. Competitors analyzing the company’s program will try to figure out how these inputs impact rating and underwriting, to no avail.
