ImpactFavorable Bottom- and Top-Line

Insurers overwhelmingly report positive impact on their bottom line from predictive model use and continue to see positive impact on their top line.

Bottom line

Rate

accuracy

98%

Loss ratio improvement

91%Profitability87%

Top line

Renewal

retention

55%

Expansion of underwriting

appetite

46%Market share41%

Homeowners Workerscomp

Generalliability —CMP/BOP

Commercialproperty/CMP/BOP

Commercialauto

Personal lines Standard commercial

19%19%10%14%

11%

Percentage currently modelingIncrease in 2014

73% 61% 43% 51% 47%Personal

auto

17%

97%Homeowners Workers

compGeneral

liability —CMP/BOP

Commercialproperty/CMP/BOP

Commercialauto

Personal lines Standard commercial

19%19%10%14%

11%

Percentage currently modelingIncrease in 2014

73% 61% 43% 51% 47%Personal

auto

17%

97%

Use of Predictive Modeling for Risk Selection and Pricing Is

Measurable, actionable results are boosting predictive modeling use in core business functions. Predictive modeling use in risk selection and pricing increased materially for all lines of business from 2013 to 2014.

Up

How Can Predictive ModelingHelp?P&C carriers are using predictive modeling in multiple areas to help elevate profits and gain competitive advantage.

Underwriting/Risk selection

57% currently use

33% plan to useClaim triage

19% currently use

37% plan to use

Ordering reports

23% currently use

48% plan to use

Target marketing/Direct mail/Advertising strategy

18% currently use

36% plan to use

Evaluation of fraud potential

28% currently use

36% plan to use

2014 Predictive Modeling Benchmarking Survey

How Are P&C Insurers Using Predictive

Modeling for Competitive Advantage?

Credit/Financial attributes are the most valuable predictors for both personal and standard commercial lines, with many other types of variables adding value.

report their companies are not using price integration techniques, consistent with our 2013 survey.

Insurers that apply predictive modeling with greater depth and breadth will gain more traction in competitive markets.

66%Room for

$

Improvement

Data-Driven Companies Have the

Advantage

For non-data-driven companies, the biggest hurdles revolve around data capabilities rather than aspirations.

Valuable

Predictors

Personal lines

Standard commercial lines

89%Account

experience

97%Vehicle

characteristics

86%Prior claim attributes

(CLUE)

82%Geographicinformation

89%Property

characteristics

75%Propertycharacteristics

93%Credit/

Financial attributes

100%Credit/

Financial attributes

35%say their companies are not data drivenbecause of:

67% Volume/Credibility of data

83% Data warehouse constraints/Access to data

61% Lack of sufficient staff to analyze data61% Lack of tools to analyze data

61% Lack of expertise to analyze data

65%say their companies are data driven and employ analytics far more aggressively in other aspects of their organization such as:

71% Performance dash-boards by function

68% Performance indicators by function

94% Predictive models for pricing/risk selection