The primary two pillars are effectively understood and deeply embedded in insurer fashions. The third ‘place’ has at all times mattered too, however the information now obtainable provides us the chance to know it in far larger depth. Geography is greater than only a location marker. It’s a lens into behaviour, setting, and publicity.
From Postcode to Prospect
Postcodes have been a basis of UK insurance coverage pricing for many years. Each insurer already components them into ranking tables. However past their use in pricing, postcodes may also assist reply an even bigger strategic query: the place else ought to we develop?
If you already know which components of your guide carry out strongly, the pure query is: the place else seems to be like this? These are your lookalike geographies, postcodes that share the identical environmental and socio-economic profile as your greatest clients, even when they’re exterior your present quoting footprint.
By figuring out and focusing on these areas, insurers can broaden their footprint with larger precision, backed by proof quite than assumption.
Why Lookalike Geographies Matter
The UK motor market is fiercely aggressive. Switching charges are excessive, margins are skinny, and new enterprise progress is tougher than ever to realize. Conventional levers, adjusting ranking curves, tweaking acquisition spend, or opening new channels, solely transfer the needle to date.
Lookalike geographies provide one other lever. By specializing in postcodes that mirror the situations of your strongest-performing segments, insurers can:
- Goal market entry with extra confidence.
- Information dealer improvement in direction of high-potential areas.
- Help pricing technique with clear proof of the place danger is genuinely decrease or greater.
And since geography is rooted in real-world components, the logic is simpler to clarify throughout the organisation, from pricing to distribution, and from underwriting to compliance.
Apollo + Atlas: A Mixed Lens
At Shopper Intelligence, we mix two complementary capabilities to unlock this chance:
- Apollo – our machine studying pricing engine, constructed with explainable AI instruments to point out not solely how the market costs particular person danger components, but in addition how these components work together. Apollo helps quantify the energy of relationships between options, for instance, how geolocation indicators mix with driver traits or automobile attributes to form aggressive pricing.
- Atlas – our postcode enrichment mannequin, which describes the setting round every postcode utilizing over 200 engineered options.
Collectively, they supply insurers with a twin view:
- Apollo exhibits how the market costs geography and the way it interacts with different components.
- Atlas explains why geography issues by revealing the underlying indicators.
By linking them, insurers cannot solely benchmark their very own strategy towards the market but in addition determine new postcodes with the identical profile as their greatest clients. That’s the essence of lookalike geographies.
Constructing a Richer Image of Threat
What does this appear to be in observe?
When constructing a richer image of danger, Atlas doesn’t depend on single indicators. It layers collectively a number of dimensions of the setting:
- Who lives within the space – age distribution, family composition, training, employment.
- Deprivation indices – not simply an total rating, however particular elements like long-term unemployment or transport availability.
- Accessibility of companies – proximity to GP surgical procedures, hospitals, or key facilities, which affect commuting and driving patterns.
- Affluence and socio-economic standing – indicators of monetary stability and family resilience.
- Housing and property combine – family measurement, property kind, council tax band, and property values.
- Transport and highway setting – automobile possession, commuting modes, highway community high quality, and historic collision information.
Taken collectively, these options create a multi-dimensional fingerprint of place.
As a result of Atlas danger scores correlate strongly and linearly with noticed loss expertise, this enrichment isn’t simply descriptive, it’s predictive. Which means lookalike geographies don’t simply appear to be your greatest clients on paper; they behave like them in observe.
From Correlation to Confidence
The energy of Atlas lies in the truth that its scores will not be summary constructs. They’ve been proven to align intently with real-world loss outcomes. Increased Atlas danger scores translate into greater noticed loss ratios, and decrease scores map to decrease losses.
This predictive energy turns enrichment into motion. It permits insurers to broaden into new areas realizing that the profile they’re focusing on has already been demonstrated to align with higher danger.
Rigour Behind the Mannequin
Atlas wasn’t constructed by merely throwing information right into a mannequin. It was fastidiously engineered:
- Over 200 options from trusted, official sources (ONS, DfT, Met Workplace, Land Registry, DVLA, police information).
- Options grouped into domains like commuting, housing, crime, climate, and affluence.
- Translated into 50 calibrated danger buckets, capturing gradations of danger throughout the UK postcode system.
Crucially, we used explainable AI instruments and cluster evaluation to interrogate the relationships inside the information. This helped us perceive why sure options are predictive, not simply that they’re.
For instance, when inspecting classes of crime, it grew to become clear that some indicators of social setting are extra predictive of danger than others. It’s not about easy correlations, it’s about constructing a clear story of why geography issues. That transparency is important for each pricing and governance.
A Framework for Progress
With Atlas and Apollo, insurers acquire greater than two fashions. They acquire a framework for progress by way of geography:
- Outline the profile of shoppers or areas that ship stronger outcomes.
- Benchmark how the market costs those self same options, together with the way in which geography interacts with different danger components.
- Map postcodes that share related profiles, your lookalike geographies.
- Broaden your footprint with confidence, supported by proof that’s each predictive and explainable.
This isn’t about changing present approaches. It’s about enriching them with new readability, and increasing them into a brand new dimension of progress.
From Footprint to Future
Motor pricing will at all times be concerning the individual, the automobile, and the place. With Atlas and Apollo, insurers now have the instruments to know “place” in larger depth than ever earlier than and to make use of that understanding not only for pricing, however for progress.
Lookalike geographies flip postcodes into prospects. And with danger scores that correlate to loss, they flip prospects into worthwhile clients.
From footprint to future, that is the following step in making insurance coverage pricing not solely extra predictive, however extra commercially highly effective.
