# Risk Committee brief — Profile B premium cut

**To:** Risk Committee, Horizon Risk Consulting  
**From:** Horizon trainee (worked example)  
**Subject:** Should we cut Profile B motor premiums by 10%?

## 1. Question

Can the insurer cut the annual premium for Profile B (age 35, clean record) by 10% to win market share without pricing below expected cost?

## 2. Method

I rebuilt the Module 3 calculator from `motor_claims.csv` (5,000 synthetic policy-years, seed 42): frequency × severity for base expected cost, age relative frequencies, 25% loading. Profile B uses the 26–40 relativity. Current quote **£292.80**; proposed cut **£263.52**. I compared the proposed premium to expected cost for that profile (including loading), not to a marketing target.

## 3. Results

| Item | £ / year |
| --- | ---: |
| Expected cost (Profile B, with loading) | **292.80** |
| Current premium | **292.80** |
| Proposed (−10%) | **263.52** |
| Margin at proposed | **−29.28** |

Chart: `outputs/charts/module5_option_a_premium_cut.png`. At current rates the quote sits on expected cost; a 10% cut opens a clear deficit of about **£29** per policy-year for this profile.

## 4. Limitations

Synthetic data; age factors here do not show the classic young-driver spike (uniform claim probability in the generator). Loading is a blunt 25%. No competitors’ rates, elasticities, or cross-subsidy from other bands. One-year view only.

## 5. Recommendation

**Do not cut Profile B by 10%** on this evidence. The proposed premium falls below the loaded expected cost, so volume won this way would need subsidy from other drivers or capital. If commercial pressure is real, look at expense savings, selective discounts with telematics, or a smaller cut that keeps margin non-negative — not a round 10% for the slide deck.