Predictive analytics is yielding positive results for underwriters on the property/casualty front, but some issues continue to hinder its efficient use for maximum benefit, a survey said.
Valen Analytics, a P/C data analytics and modeling firm, said that 65% of the 115 respondents indicated they used predictive analytics in underwriting this year, a 9% increase from last year.
Of those surveyed, 83% said they used the tools for better risk assessment, 82% said they need it for accurate pricing and 73% cited the benefit of protection from adverse selection.
Concern over implementation issues also dropped significantly by 52% from last year, down to 25% in the current year.
Still, actuaries and underwriters continue to be at loggerheads over pricing, with 52% of respondents reporting struggle between these two professions within their organizations. Half ascribe the conflict to underwriters basing their decisions on judgment over data, while 42% noted that actuary rates are not synchronous with market demand, often being well beyond the reach of the client.
Valen Analytics Chief Executive Officer Dax Craig noted that the industry “appears to be in a state of transition,” with many still trying to figure out how to implement a “holistic” predictive analytics strategy. Further, he advised carriers to develop a form implementation plan, with clear goals and metrics that are directly linked to the organization’s overall strategy.
