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Valen Survey Shows Actuaries, Underwriters at Odds Over Pricing

Staff Writer | September 16, 2015

Valen Analytics, a provider of proprietary data, analytics, and predictive modeling to help insurers manage and drive underwriting profitability, announces findings from a survey confirming a long-standing internal conflict remains over pricing, spotlighting a fundamental issue hindering innovation within insurance.

Valen interviewed more than 200 P&C insurance professionals and found that over three quarters of participants confirmed their companies face pricing disputes between actuaries and underwriters. Of the 77 percent who cited the conflict, the vast majority selected “underwriters dismiss data for judgment” (43 percent) as the reason, followed by “actuary rates are too high for market” (21 percent), “actuaries are too conservative” (19 percent) and “underwriters are too optimistic/aggressive” (16 percent). 

“As the insurance industry continues to face disruption at an accelerated pace, there is an increasing disparity between companies that are more advanced in analytics and those that aren’t,” says Dax Craig, CEO of Valen Analytics. “The race is on for underwriting profitability, and if carriers don’t take necessary steps to repair the misalignment between actuaries and underwriters, they will have a difficult time maintaining their competitive market position.”

Valen Analytics surveyed a variety of insurance decision-makers, with over half of all participants in executive-level roles in actuarial, underwriting, and IT. These findings are largely reflective of an earlier survey from Valen in April, which found that 82 percent of participants expressed underwriting adoption as a ‘significant’ or ‘high concern’ when deciding to implement analytics, citing the similar reason that underwriters believe their experience is more valuable than a predictive score when assessing risk. 

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