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Understanding on difference between new business vs renewals

S

StartedThinking

Keen member
Hi

I have seen a lot of answer scripts talking about new business vs renewals

one thing I can recollect new business is costlier to acquire, renewal less costlier
But I am not clear about split importance in terms of

reserving
Capital modelling
Pricing: although above point might contribute to premium
can anyone please help me understand this better
 
That's a very open question! Perhaps you can be more specific about which element you don't understand?
Splitting data into various homogenous groups is just one part of any exercise - be it reserving, capital modelling or pricing. One common split is by new/renewal simply because the business may behave very differently depending on whether it's new to the company or has been around for a long time. Yes, expenses are the obvious big difference, but also, for example, claims behaviour and risk profiles vary between new and renewal business.
Hope that helps!
 
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