Digital Insurance Agenda

Lumnion: state-of-the-art AI-based pricing platform for P&C and Health Insurance Industry

Written by Roger Peverelli and Reggy de Feniks - Founders The DIA Community on Dec 28, 2021

The pricing process in insurance has changed very little over the last 30 years. There is no automation in data preparation and pricing is nearly always only done with GLM algorithms. Machine learning algorithms are out there, but can’t be used because they are black boxes and not transparent. IT solutions can be outdated and there is no audit traceable reporting for the process.

Lumnion’s open platform allows the use of all the widely accepted Machine Learning Algorithms including XG Boost, Random Forest, Decision Tree, as well as GLM and GAM for risk modelling. In their platform, Lumnion allows actuaries to model risk in all algorithms and compare them side by side with the same data set.

Moreover, Lumnion has also developed its own methodology to make results of the black box machine learning algorithms transparent, so that they become operationally usable.  If required, the results of any of the ML algorithms are made transparent, showing variables to be used, their significance and interactions even up to 6th dimension, which allows actuaries to see into the results. The advisory module helps relieve actuaries from operational work, and improves model results dramatically.

Lumnion’s pricing platform allows companies to optimize pricing on a personal level with the use of external data, getting a 360° view of the customer. 

With its integrated Rule & Rating Engine, Lumnion also allows for faster time to market for any commercial price decision.

Benefits of Lumnion

  • Automates data preparation
  • Model risks with the use of all widely available ML Algorithms with the same data set
  • Brings transparency into all ML Algorithms’ results
  • Manages street pricing real-time/seamless
  • Moves from risk-based pricing to behavioral pricing with the use of external data, where Lumnion provides the non-insurance data to get the 360° view of the customer

How it works
Lumnion offers an AI-based, Non-Life Pricing Platform that consists of four tools that can also be used separately and independently from each other.

  • Bee: Automated, Data Preparation & Earned Premium Calculation Tool
  • Cheetah: an AI-Powered Risk Pricing & Actuarial Modelling Tool that can run various ML Algorithms and GLM as well.
  • Dolphin: The AI-Powered Scenario Testing, Price Management and Optimization Tool
  • Octopus: Modelling Optimization Tool with the use of External Data (360° view of the customer)

    Who is Lumnion?

    Lumnion GmbH is a German company, with offices in Munich, Köln and İstanbul, that develops AI-based pricing tools for the insurance industry. They aim to deliver solutions to their clients for fitting their business for the future, redefine what is possible and find distinctive ways to move ahead of their competitors. The company was founded in 2019.

    Lumnion was selected as the first partner of SAP Fioneer’s “Amplify Insurtech” partner program. Through this partnership, Lumnion will be able to get integrated into SAP Fioneer’s main systems, and through SAP Fioneer’s global reach, gain new customers and enter new markets.

    Lumnion’s Pricing Platform offering has been reviewed and approved by Amazon Web Services (AWS) via the Foundational Technical Review (FTR). The FTR confirms to customers that Lumnion meets AWS’ high security, reliability, and operational excellence standards and Lumnion achieves Independent Software Vendor (ISV) Official Partner status.

    “Lumnion’s mission is to make sure every insurance policy gets the correct pricing in the fastest way possible for its risk.”

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