Pinpoint Predictive, a loss prediction and risk scoring service for insurance carriers incubated in the InsurTech NY global startup competition, is having an impact by reducing carriers’ loss ratios.

Pinpoint applies behavioral-based intelligence that helps carriers know more about the insureds they are covering when they write policies, according to Scott Ham, CEO of Pinpoint. “It is an equitable, very powerful way for carriers in the top of the funnel of risk stratification, to really know who someone is, before they even come in and fill out an application,” Ham said. “We’ll know the claims frequency or claim severity or loss cost of that consumer.”

The company has gone from getting its first client in 2021 to nine clients today. For most of these, using Pinpoint has reduced loss ratios by three to seven points, according to Ham, yielding at least four times the return on their investment in the service.

Founder and CIO Avi Tuschman and the Pinpoint team custom curate “trillions of data points,” Ham said, to create behavioral profiles of consumers. Ham met Tuschman through InsurTech NY and brought his past experience with Transamerica and McKinsey to the company. Pinpoint’s technology can help address the issues carriers have had with risks in certain U.S. states that have led them to stop or pull back on coverage, according to Ham.

“Combined rates aren’t doing well. Loss ratios within those aren’t doing well. So carriers are raising rates to get their profitability up,” he said. “Policyholders continue to get charged more. And when a carrier doesn’t get the rates they want, they leave a state. And when policyholders can’t afford it anymore – as in Florida — they stop buying homeowners insurance. Neither of those is good.”

In the case of Florida, litigation costs contributed to the rise in premiums, and Pinpoint’s loss predictions can mitigate that type of expense, according to Ham.

Pinpoint pulls in information including tendencies to hire lawyers, cancel coverage early or be flagged by insurers’ special investigation units (SIUs). All of these are at the top of Pinpoint’s “funnel” for scoring risk, Ham said. “It’s better to avoid the claim, than have to triage the claim in the beginning, so avoiding or making sure you’re pricing correctly is much better than getting the claims and incurring the costs,” he said.

Working with Pinpoint’s risk scores improves the function of insurers’ rating and pricing engines, Ham added. “If you’re selecting better and assessing risk better, then you’re getting better information,” he said. “So your underwriting model will work fine. You can make your final decisions. They fit the risk appetite, and so pricing and rating work better as well. So they don’t have to keep filing [with state regulators] for rate increases.”

Pinpoint users report positive results from the optimization its service provides, according to Ham. Strategies for renewing policies can be optimized based on Pinpoint’s risk scoring, he explained. Improving risk mitigation and optimizing carriers’ portfolios can even reduce reinsurance rates that have skyrocketed lately, Ham said.

The company is looking to grow in its service of property and casualty carriers. Pinpoint targets the top 125 P&C carriers of home, auto and small commercial coverage. However, its growth plans will be deliberate and careful, as Ham said.

“One thing that gets in the way of some insurtech success is chasing shiny objects,” he said. “We’re going to prove out our hypotheses, and are proving it. When we feel we’re ready, we’ll move to the next line or explore expansion. But we’re being very thoughtful about where we’re at.”