How can Naked Insurance balance offering lower premiums with maintaining profitability?

Introduction

Balancing lower premiums with profitability is a critical challenge for Naked Insurance. This trade-off involves weighing the potential for increased market share against the risk of reduced margins. I'll analyze this problem by examining the product ecosystem, key metrics, and potential experiments to inform our decision-making process.

Step 1

Clarifying Questions (3 minutes)

• Business Context: I'm thinking Naked Insurance might be facing increased competition or aiming for rapid growth. Could you share more about the current market dynamics and our strategic priorities?

Why it matters: Helps frame the urgency and scale of the premium adjustment. Expected answer: Competitive pressure is increasing, growth is a priority. Impact on approach: Would focus on aggressive pricing strategies if growth is critical.

• User Impact: Based on the nature of insurance, I assume we have different user segments with varying price sensitivities. Can you provide insights into our current customer base and their behaviors?

Why it matters: Allows for targeted premium adjustments. Expected answer: Mix of price-sensitive new customers and loyal existing customers. Impact on approach: Would consider segmented pricing strategies.

• Technical Feasibility: I'm curious about our current pricing model's flexibility. How easily can we adjust premiums across different products or customer segments?

Why it matters: Determines the granularity and speed of implementing changes. Expected answer: Fairly flexible system with some legacy constraints. Impact on approach: Would influence the complexity of proposed solutions.

• Resource Allocation: Considering this is a significant strategic decision, I'm wondering about our capacity for analysis and implementation. What resources do we have available for this initiative?

Why it matters: Affects the scope and timeline of potential solutions. Expected answer: Limited data science team, but strong actuarial support. Impact on approach: Would prioritize solutions that leverage existing strengths.

• Timeline Constraints: Given the potential impact on our financials, I'm thinking about the urgency of this decision. What's our timeline for implementing changes, and are there any upcoming regulatory or market events to consider?

Why it matters: Influences the depth of analysis and testing we can perform. Expected answer: Need initial changes within next quarter, with ongoing optimization. Impact on approach: Would focus on quick wins with a roadmap for long-term refinement.