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Wefox MGA

High-level objective:

  1. Use the wefox Italy platform to generate multiple streams of income from the Italian market with focus on affinity and motor.

Tasks:

  1. Sforni to send HRe expected margin
  2. Arch to agree internally on acceptable structure
  3. WeFox to send MTPL information to Arch (portfolio information from targeted brokers)
  4. Arch send proposed structure to WeFox
  5. Arch prepare reinsurance pack
  6. Sforni send RI pack to Hannover
  7. Hannover provide quote
  8. Axeria prepare submission for ACPR
  9. WeFox / Italian law firm prep local requirements
  10. Arch hire external actuaries to design MTPL tariff
  11. Discuss and agree MTPL tariff together, Arch does analytical work, propose and discuss final tariff with WeFox
  12. Arch to send termsheet to WeFox
  13. Axeria perform Due diligence
  14. Axeria send TOBA to WeFox
  15. Operations begin, target live date 1 July. If necessary, start with MOD only.

Minutes from calls/meetings:

24.05.2024

Call with Matteo to understand the current situation.

07.05.2024 meeting with WTW / Wefox

sources : webcrawling directly from the website of the company.

1M record sample, new business in the new market

44 Million vehicles --> new business --> sample 1M rows.

5k --> low sophisticated tarifs

10k --> high sophisticated prices

--> algorithm to calculate discounts

--> standard 1000 quotes per moth

06.05.2024 Wefox/ Miliman

--> need for significant data, market knowledge, competitor analysis, comparison to competitors. Software.

--> radar Emblem Miliman

--> Data to be used.

--> Vehicle data : mainly private car private car.

--> MOD maybe motorbike

--> Fake tariff approach for non target segments.

--> Distribution : traditional intermediaries, higher acquisition costs- > better performing portfolio.

--> ANIA data source, how much is the commission. Base premium - loadings of Allianz.

--> Pooling data for frequency estimated by GLM. smoothing cluster in terms of frequency.

--> Allianz tarif very technical

--> 6 are using postal codes,.

--> Vehicle type : external data base provide a lot of information quotes.--> value of the car MOD side.

Risk tariff

Minimal can propose a tariff proposed using market data, claims frequency and claims severity or pure premium approach.

Ania + non disclosed benchmark.

Commercial tariff: monitoring day by day, 100k policies ( Unipol and generali )

daily quoting prices, scrapping for world market, aggregations, traditional insurer ( outside aggregation)

Miliman clients : aggregated level information from competitors.

Data from brokers agents. information from.

Quotes from motor own damage, competitive analysis for telematics and traditional.

80% of the market competitors. Generali, Axa.

20% irrelevant prices.

Data set :

Best price, lowest price.

line by line.

13 years, they said market knowledge.

Scrapping directly the company website.

Prices including discount,

Target start date June first. + 12 weeks

Market knowledge:

Some companies are making well and some are making money. some others loosing.

Increasing average premium, retention is decreasing.

All groups have traditional and direct companies, hard market. --> technical

Expenses: commission side.

Traditional channel is predominant.

15 to 20% directly.

10 April, 2024, 16:00

Meeting with Akur8:

They don’t have data, but work with a number of partners.

They will send us a list of partners (anonymised) and the level of data they offer.

Post-call discussion with Massimo, Emmanuele:

Most of the market uses GLM as their main risk model, with GBM / other machine learning models used in demand modelling, lifetime modelling, etc.

To find an edge you need to bring in new factors / sources of information, rather than trying to rate differently with the same factors.

Need to start writing and participate in data collection with ANIA to get information from their DB.

Data would be of limited use to us - limited to querying 3 factors for a given KPI (e.g. frequency).

Regulator would issue warning if an insurance company scrapes the DB. But not an issue for a consultancy.

08.04.2024

Meeting with WTW:

Market view of TW: Margin opportunity, market is hardening after 10 years of soft market, profitable niches ( good technology is key here ), 10m--15m GWP is a feasible,

Strategy:

--> MGA is a market trend, Entering a market requires investments.

--> Investment in technology

Being able to change rates on a daily basis

Creating a trading entity.

UW strategy : Motor MGA instead of only motor, most relevant part is how much you can sell MOD to the right people. MTPL is compulsory and there are maximum premiums.

Technical tarif : WTW :

1m sample of risk profiles, analysing Ania data, and also competitors data.

No claims data.!

Ania --> Fake risk profiles --> 2 sources --> web crawling to get the rates.

25 players --> 50% web crawling , in aggregators age and plate --> fake price.

Traditional players are not making this controls.

Expenses : Ania , infoBila provides loadings. Expense ratio for each,

Output :

Level of service1 :1M profiles, with market rates ( average, top 5, last 5), technical price.

Level of service2: full detail of prices with each competitors price.

Distributions by ages, municipalities, 30. 35 risk factors

Selecting a number of insurers that are more technical.

13 February, 2024, 15:30

AÓF call with Bruno and Stefano.

They’ve already set up a meeting with Hannover, but would like to approach reinsurers together.

Queried whether we need reinsurance in place to get license. They were trying to push to get everything included.

Pricing: We can go one of two ways on MTPL - WeFox design a tariff, or we design one together. I said we are open to both, but if neither of us have data, we need a reliable way to benchmark, and pricing must be iterative.

Sforni suggested an actuarial consultancy firm in Rome that will be able to verify a proposed tariff for us.

WeFox getting anxious; we should go and see them in Milano asap. Stefano wants to know our target commission, etc.

6 February, 2024, 14:55

Call with Bruno. He spoke to Matteo and he expressed our concerns with Massimo leading this project. Matteo made it clear that Massimo is only on the sales/distribution and responsible for the products is Mauro and under him Emanuele, the actuary. Mauro is Head of Products.

Call 19.02.2024

Scope is motor MOD + MTPL plus Ancillary + WIND Tre, the didn’t provide data cause the current volume is very little.

Axeria is expected to get 100% on Motor, 50% on WindTre

WindTre porfolio is composed of Home , Affinity ( White goods + electronics)

Arch discussion ;

Wefox wants to put both both carriers on same pricing.

who are the other carriers / previous carriers,

  1. MOD/ancillaries portfolio versus MTPL portfolio -> 2:1 volume ratio
  2. Changes to their pricing to become more risk sensitive. No loss making segments. More expensive on the cat-prone areas, prices have gone up significantly from other players on cat covers. 50-50 random selection.
  3. Slide on their over-rider
  4. Business must make sense even if we cannot find reinsurance for it
  5. Affinity is too small, will be judged on stand-alone basis after we understand the products.

MTPL and ancillaries.

1 portfolio dealerships, fee + PC overall

Dealerships : MOD+ PA + Legal assistance + minor coverages

MTPL: MOD + PA legal assistance

9 % on MOD

Reinsurance --> Convince Hannover to improve the LR

28.02.2024

Portfolio consists of 500 cars dealers, some car dealers produce only 1 policy per month.

they approach directly the owner of the car dealer, on a specific approach with commissions and profit shares agreement.

Majority : range 45% -48% premium before VAT, to include the insurance offer.

Complete embedded in the financial offer (75%), 25% outside of the financial program.

Business is driven by the commission and pricing :

Pricing:

Car dealerships are reluctant to accept more sophistication.

Reinsurance Meeting:

Positive reaction of Hannover Re, they know that Wefox is more of a broker than an insurer.

They also see it as positive that Axeria / Arch provides Underwritting and Pricing capabilities.

Framework we are going to offer

Meeting with Yannis on Wefoy MTPL:

Meeting 13.03.2024 Bruno Sforni

reinsurance