CAMEO for Risk and Pricing

Pound signWhere you live and your key demographics will have a direct link to your likely risk for credit, insurance and fraud. CAMEO is used extensively by our financial clients and the risk side of our business, as a key component to their credit risk, fraud and affordability models.

Where an individual has adverse credit, you can get a good indication of their likely future risk, however for the majority of the population that don’t, how can you tell them apart and make an assessment of their risk to your business? That’s where CAMEO helps.

It helps to set the appropriate price for financial products, based on the likely risk of an individual. The lower the risk, the more competitively you can price your products, and CAMEO can assist in the risk assessment.

Risk And Pricing Diagram 01

 

The CAMEO data is very rich and granular compared to other geodemographic data sets. CAMEO goes beyond the standard geodemographic segmentation (age, social class, geography) to provide an in-depth understanding of consumers across multiple aspects from income, risk, investments, public debt (CCJ & bankruptcies), property prices, length of residency, tenure, unemployment, ethnicity, deprivation, attitudes and behaviour.

The CAMEO data has proved very predictive for risk assessment and is used as a backbone data source to Callcredit’s credit marketing and application scorecards. It is also used extensively in client bespoke credit risk models.

Our Insurance clients have found certain CAMEO segments are highly correlated with areas of high insurance claims, insurance fraud and personal injury claims. They have been able to apply this CAMEO analysis into their risk and pricing models to reduce the claim and fraud rates.

Key uses of CAMEO for risk and pricing:

Number 1 Risk Assessment based on a person’s key geodemographics –age, income, occupation, education, household composition, length of residency, public debt (CCJ & bankruptcies), lifestyle and neighborhood.
Number 2 Pricing for credit risk, helps to align pricing and interest rates with the associated credit risk of an individual.
Number 3 Pricing for insurance products, helps to set appropriate premiums and pricing based on the insurance claim risk of an individual.
Number 4 Campaign scorecards. CAMEO can be used to differentiate response as well as ‘Accepts’ versus ‘Declines’ at the application stage. Helping to increase both response and conversion rates.
Number 5 Increasing targeting precision. Using CAMEO selections to increase conversion rates and reduce marketing wastage costs.
Number 6 Customer Management & Affordability. Understand your customers and identify the best targets for up-sell and cross-sell based on their profile, risk and affordability.
Number 7 Fraud Assessment. Used to help predict fraud and risk levels for delivery and shipment, as well as ID fraud, where there are unexpected shifts in CAMEO codes.
Number 8 Debt Collection & Recovery. CAMEO has been used to predict which debt records are most likely to pay in full and prioritise the debt recovery.