Premium Adequacy vs Customer Affordability
Redesign deductibles, limits, and payment structures to maintain premium adequacy under Solvency II without pricing customers out of coverage.
CyberTRIZ analysis · Insurance contradiction UW009 · one of 8,235 worked contradictions published by CyberTRIZ.AI
Regulations
Business Context
Premiums must be sufficient to cover expected claims, expenses, capital requirements, and an appropriate return, yet customers may be unable or unwilling to absorb the full price associated with their risk. Inflation, catastrophe exposure, repair costs, medical expenses, or changing loss patterns can increase technical premiums rapidly. Suppressing necessary increases improves short-term affordability but can make coverage economically unsustainable.
Insurance TRIZ Resolution
The premium should not be treated as the only adjustable component. Insurers can redesign how risk is divided through deductibles, limits, optional coverage, prevention measures, payment structures, and other product parameters. Customers can retain portions of predictable or manageable exposure while transferring losses that would create greater financial disruption. Risk-reduction measures can further lower expected loss rather than merely redistribute cost.
Applicable TRIZ Principles
Principle 2 – Taking Out removes selected low-priority or manageable exposures from insured coverage.
Principle 15 – Dynamics allows coverage and financial participation to adapt to customer circumstances.
Principle 35 – Parameter Changes adjusts deductibles, limits, payment structures, or coverage parameters instead of suppressing technically required pricing.
Expected Outcome
More affordable insurance options
Improved premium adequacy
Greater customer choice
More sustainable coverage structures
Decision Indicators
Early indicators that this contradiction is limiting product performance include:
Required rate increases cause substantial customer attrition.
Premium caps produce persistent pricing inadequacy.
Customers reduce or cancel coverage because of cost.
Underwriters rely increasingly on discounts to preserve renewals.
Loss costs rise materially faster than achievable premium.
Monitoring these indicators helps insurers improve affordability by redesigning risk participation rather than maintaining inadequate prices.