Pricing | The Pricing Committee Pack - Executive Result

The Decision Question

This edition starts the Pricing Committee Pack series with the first chart in the pack: the executive pricing result. The committee question is: what changes if we act on this pricing indication? A technical indication gives an anchor. The executive result should show what happens when different selected actions are considered.

The Default Practice

Pricing packs often show the current premium, indicated premium, indicated rate change and selected rate change. This may appear as a simple table, a bar chart or a current-to-indicated premium bridge.

Metric	Result
Current rate level / expiring premium	100.0
Technical indication	+17.0%
Recommended selected action	+12.0%
Expected loss ratio at current rates	76.0%
Expected loss ratio after selected action	68.5%
Target loss ratio	65.0%
Estimated retention impact	-7.0 pts
Premium volume impact	+5.0%
Recommendation	Phase to technical level over two cycles

This does something useful: it gives the committee the headline actuarial answer. It says where the technical result lands and how far the selected action sits from that answer.

Suggested Upgrade

A clearer executive chart shows the committee a range of possible selected actions.

The proposed chart aims to give the range of actions together with the technical and commercial consequences.

This chart plots a set of possible selected rate actions against two executive outcomes:

• Profit margin on the x-axis; and

• Retention on the y-axis.

Each point represents a possible selected action, from 0% through to 20%.

As the selected rate action increases, expected profitability improves, but expected retention reduces. The chart therefore turns the pricing indication into an executive trade-off view: how much margin improvement is worth the expected loss of retained business?

The shaded green area represents the preferred decision zone: actions that deliver an acceptable profit margin while keeping retention within an acceptable range.

The lower-right hatched area shows actions where profitability may be stronger, but retention pressure becomes more significant. The upper-left hatched area shows actions where retention remains strong, but the pricing action may not go far enough to meet profitability objectives.

In this example, the 10% to 15% actions sit closest to the balanced decision zone. The 12% selected action is inside the preferred range, while the 17% technical indication improves profitability further but sits below the preferred retention threshold.

The purpose of the chart is not to identify a single mathematically perfect answer but rather to show the committee the consequences of choosing a lower action, a phased action, the selected recommendation, or the full technical indication.

Decision Boundary

Use this chart when the committee is choosing the overall rate action. It is designed for the executive pricing result: the decision about the selected portfolio-level or class-level action.

Do not use it as evidence for segmentation, model performance, rating factor selection, individual customer impact or governance. Those belong in later pages of the Pricing Committee Pack.

Use this when…	Do not use this for…
Choosing the overall selected rate action	Explaining the segment-level indication build-up
Comparing adequacy, margin and retention outcomes	Assessing model performance or rating factor quality
Framing a recommended action range	Reviewing individual customer impact or fairness
Supporting executive judgement on how strongly to act	Providing governance evidence or implementation detail