How AI and Machine Learning Helps Improve Insurance Pricing

Insurance pricing is a never-ending battle. With the advent of comparative raters in the P&C insurance market, prospects can compare prices on many companies instantly, and, not surprisingly, they usually choose the lowest offer. Inaccurate pricing is costly for insurance companies: it improves competitors' customer base, reduces customer retention, and attracts risky customers. This is why actuaries spend hours on fine-tuning pricing models. But how do actuaries actually create an insurance premium?