Underwriter Adoption Cited as Biggest Concern in Survey by Valen
Staff Writer | April 17, 2015
Valen Analytics announces their findings from a survey conducted at the second annual Valen Analytics Summit in March. Based on responses from 39 P&C insurance executives, predictive analytics usage is becoming considerably more commonplace among insurers, with 45 percent implementing predictive analytics in the last two years, and more than half (56 percent) planning to start within a year.
The Valen event was focused on the increasingly rapid adoption of data and analytics within insurance companies combined with the potential impact from technology companies entering insurance. Featured keynote addresses included Andrew Rose, CEO of Compare.com; Matthew Mosher, senior vice president of ratings services for A.M. Best; and many other C-level insurance executives in the P&C industry.
The survey shed light on the fact that there is still lingering hesitancy to utilize predictive models within their business. Most of the respondents (82 percent) expressed underwriting adoption as a ‘significant’ or ‘high concern’ when deciding to implement predictive analytics. Insurance executives pointed to the top two pain points expressed by underwriters: They believe that their experience is more valuable than a predictive score when assessing risk (24 percent), while a quarter are concerned that predictive analytics will replace their jobs entirely.
“The need to implement predictive analytics in underwriting is becoming more widely recognized by insurers, but these findings show why organizational buy-in is key to its success,” says Dax Craig, CEO of Valen Analytics. “In order to achieve predictive modeling goals, underwriters as well as actuaries, executives and training teams need to be a part of the discussion pre-implementation, and be educated on how the model will be making their jobs easier, more efficient and effective.”
When asked about which areas of growth insurers are most focused on, respondents cited ‘new distribution channels’ as the top priority, followed by ‘expanding new territories’ and ‘new products/lines of business.’ Of the respondents, 75 percent also believe that technology companies such as Google will disrupt distribution channels in a significant way, with only three percent believing they will have little to no effect on agents.
Other key findings from the 2nd Annual Valen Summit include:
- 75 percent rank loss ratio reduction as the top result they need from underwriting analytics.
- 81 percent believe that predictive analytics has a moderate to significant impact when their underwriting performance is being evaluated by ratings agencies like A.M. Best, Moody’s and Fitch.
- 39 percent do not believe their company is doing an effective job in presenting their underwriting strategy and results to rating agencies. Only 19 percent believe they are doing an effective job.
- 61 percent believe that technology companies will begin impacting commercial lines within the next five years.
- 68 percent say they face a talent recruitment issue, finding it difficult to enlist the caliber of candidates needed to fill key positions.
“Concerned about adverse selection and inadequate pricing, an increasing number of carriers are investing in tools to help them make better decisions as they focus on growing their book of business,” says Karlyn Carnahan, research director of Celent. “However, successful implementation of predictive analytics will require not just tools, but an emphasis on leading the organization through change management. This requires a mix of cultural and organizational focus along with technical acumen.”
- Enterprise Architecture in an Agile World
- Top 10 Tips for Securing Your Mobile Devices and Sensitive Client Data
- Industry Insight: 4 Global Insurance Trends in Digital, Data, Content Services and Security
- Diving Deeper into Prioritizing Your Strategic Digital investments
- Why Content Rules
- How Mass Personalization Will Open the Small Business Benefits Market
- At Year End 2017, Will Your Organization Be Protected from Cyber Risks?
- Do Insurance Bots Dream of Mitigating Risk?
- Conditioned to Respond
- Managing & Mobilizing Insurance Data in a Connected World
- Race to the Finish Line
- New Tools, New Opportunities in Claims
- ITA LIVE: Reaching Insurance Industry Crossroads
- Advice to Insurance IT Leaders: Keep Your Eye on the Ball
- New Date, Venue for ITA LIVE 2017
- Guidewire Makes Major Push to Small and Midtier Market by Acquiring ISCS
- Insurance Disruption is Happening Right Now
- Insurity Adds Strategic Investment Partner, General Atlantic
- Beyond Transformation: The Convergence of Finance, Risk, and Actuarial Functions
- The Rapid Evolution of Consumer Protection Regulation
- Talent Hunt: Finding, Attracting, Retaining Top People
- Insurers Flexing Their Distribution Models
- Technology Driving Disruption in Insurance
- Fear of ‘Next Bubble’ Challenges Life, Annuity Carriers
- Technology Allows Commercial Lines Insurers to Stand Out
- Single Sign-on Viewed as Biggest Tech Challenge for Agencies
- ISCS Observes 20th Anniversary; Scurto Predicts Major Changes Ahead
- Policyholders and Their First Impressions
- Progressive Making Progress on the UBI Front
- High and Dry: Insurers Search for Disaster Recovery Plans
- Insurers Sign The (Un)Dotted Line
- Reflections of a Retired Insurance CIO
- Mobile Device Management Just One Answer to BYOD Issue
- Lessons from GEICO and Progressive on Winning the Critical Buying Stage
- You Are a Target for a Cyber Attack
- Web-based Systems are the Next Evolution in Claims Technology
- Gaining a “Wow” Experience from Web Users
- Time to Shift from Business/IT Alignment to Business/IT Alliance
- Healthcare Insurers Changing to Consumer Model
- Organization is the Key for Selecting Software Vendors
- Analysts Expound on the Needs of the Mid-tier Insurance Market
- Finding the Cure for Obamacare’s Website
- New Software Solutions Benefit Insurers on the Inside and Outside
- Products, Market Impede Investment in Systems for Life Insurers
- Combatting Cyber Threats: Predict, Prevent, Persist
- The Future of Telematics Heads Beyond Insurance
- The Shame in Cyber Security Lapses
- Building Policy Administration Systems for the Future
- Insurers Look Into The Eyes of Their Policyholders
- It’s a New Dawn for the ITA
INSURANCE IT NEWS
- Tower Selects EIS Group’s Insurance Platform to Drive Transformation
- NTUC Income Selects Majesco Distribution Management and Majesco Digital Solutions to Advance its Distribution Management Operation
- Emerson Reid Modernizes Its Business Processes With VUE Software
- Octo Telematics Powers CAA MyPace™ Pay-As-You-Go Program
- Announcing the Solartis Insure Microservice Hackathon
- DataCubes Completes Plug and Play Tech Accelerator Program
- Medical Mutual of Ohio Implements One Inc Digital Payments
- SUNZ Insurance in Production with Sapiens’ Workers’ Compensation CompSuite® Policy System
The Email Chat is a regular feature of the ITA Pro magazine and website. We send a series of questions to an insurance IT leader in search of thought-provoking responses on important issues facing the insurance industry.
ITA is pleased to present the 2014 Webinar Series. We have many topics for you to choose from and attendance is open to all ITA members. The webinar topics are current and exciting — ranging from predictive analytics to telematics and will focus on the direction insurance carriers need to follow for the future. All webinars are presented by insurance IT professionals along with some of the leading analysts and consultants in the field. There is no cost to attend an ITA webinar. For more information and to register for the webinar, click the “title” of the webinar below.
BLOGS AND COLUMNS
It has become a common refrain over the past few years to view the practice of enterprise architecture (EA) as something that time has passed by, much... READ MORE
One important trend in society over the past decade is our increasing ability to create and consume a seemingly unlimited amount of digital content... READ MORE
You have surely heard it said that small businesses are the growth engine for America. Today, the phrase has a special ring to it for benefits... READ MORE
With stagnant growth and lingering low interest rates, the life insurance industry faces a challenging future... READ MORE
Finding insurance carriers willing to write commercial lines risks has always been a challenge for producers... READ MORE
As Guidewire Software prepares for the start of Connections, its 11th annual user conference that begins on Nov. 2, Brian Desmond, chief marketing... READ MORE
Fraud detection has always been and will continue to be a critical component of claims management. Learning the lessons from current claims Straight... READ MORE
- Vendor Views