WIN Magazine - Winter 2013 - (Page 20)

FEATURE PREDICTIVE ANALYTICS: "BLACK BOX" THE USED BY SAVVY INSURANCE PROFESSIONALS W BY FRED E. KARLINSKY, ESQ. AND RICH J. FIDEI, ESQ. 2 0 | v i e w t h i s i s s u e a t | OULD A HEALTH insurer like to know if its policyholder was participating in a mixed martial arts competition? Would a property insurer like to know its homeowner just installed a trampoline in the backyard? How about litigation intelligence on a claim showing the plaintiff was actually in Arkansas the day of an alleged doctor's visit in New York? In all instances, the answer is a resounding YES! On a daily basis, savvy insurers use available information from internal and external sources to focus marketing efforts, messaging and solicitations. They do this through complicated algorithms and modeling that identify predicted behavior based on past actions-a process otherwise known as predictive analytics. A good example of insurers' use of predictive modeling to sell and price their products is the application of insurance credit scoring to personal lines coverages. Another, telematics, which is individual analysis of an insured's driving habits, is increasingly used by insurers to aid in automobile insurance pricing. Douglas Greer, Senior Director with Alvarez & Marsal Insurance Advisory Services, LLC observed that the combination of "big data" and predictive analytics can be powerful. Telematics, which produces large quantities of behavioral data such as driving speed, miles driven or acceleration, is one of the best examples, he explained. As insurance carriers continue to harness the huge volume of available information on individuals and develop models to analyze that information and predict behavior, the practice of predictive analytics will continue to evolve, Greer added. But why is predictive analytics so appropriate for insurance? Its high-level evaluation-based on increasingly complex algorithms-is made possible due to the industry's consistent, reliable and highly detailed data that can be easily stored,

Table of Contents for the Digital Edition of WIN Magazine - Winter 2013

Disappearing…and Reappearing Risk: What Lies Ahead
An Innovative Solution for Reducing the Debt of College RMI Students
Does Politics Influence Regulatory Forebearance?
Predictive Analytics: The “Black Box” Used by Savvy Insurance Professionals
Just the Facts—On FATCA: Frequently Asked Questions on the Foreign Assets Tax Compliance Act
Your Reputation Matters, Online and Off
New Wholesale Insurance Product Focus: Protection from Hacked Bank Accounts: Protecting Small Business Policyholders
In the WIN-ner’s Circle
Index to Advertisers/

WIN Magazine - Winter 2013