You are building a 12-month forecast for a newly launched direct-to-consumer insurance business unit with only three months of operating history. The CFO needs a budget recommendation before year-end, but the launch was recent enough that earned premium, claims, and renewal behavior are not yet stable. You do have early funnel data from Nationwide.com quote traffic and policy conversion, plus benchmark loss ratios from a comparable legacy auto product. Your task is to produce a defendable revenue and contribution forecast despite the limited history.
| Metric | Value |
|---|---|
| Q1 quote starts | 120,000 |
| Q1 quote-to-bind conversion | 4.5% |
| Average monthly written premium per new policy | $145 |
| Expected monthly premium retention | 96% |
| Benchmark loss ratio | 62% |
| Variable servicing cost per active policy per month | $11 |
| Fixed operating expense per month | $420,000 |
| Planned monthly marketing spend | $310,000 |
| Expected quote starts growth per month | 8% |
How would you build the forecast model, what would your base-case 12-month contribution look like, and how would you quantify the uncertainty around the forecast given the limited historical data?