Heightened competition and stronger regulation have changed the landscape in management of small-group financial risks, making the ability to forecast group-specific responses—and to understand the stochastic variation of such forecasts—more critical than ever. Milliman consultants use our proprietary Small Group Stochastic Pricing Simulator™ (SGSPS™), to meaningfully model these risks for small-group insurers.

Pricing and product strategies made simple, stronger

SGSPS takes into account a complete range of criteria that affects groups' decisions to renew or change plans—including forecasted experience levels, the insurer's rate actions, regulations, and claim trends—so that insurers can model a variety of rating strategies to find the one that best fits their risk and competitive profiles. Our model also provides estimates (with variance) of future profitability of new and in-force small-group blocks, allowing for extensive stochastic sensitivity testing. Our financial forecasts provide detailed quarterly financial projects (as far as three years in the future), and the reports generated during these analyses can be used to document compliance with rating regulations.

SGSPS analyzes a range of possible outcomes

Unlike traditional models that produce a single expected value and do not evaluate the likelihood of actually achieving this value, Milliman's stochastic models provide a range of scenarios and their associated likelihoods, empowering insurers to pick the best fit for their strategies from among a range of risk levels and product pricing strategies.