Kevin Thompson speaks with Best's Review about predictive modeling and advanced analytics.
ISO's Predictive Models: Advanced Tools for Today's Insurance Marketplace
By Kevin B. Thompson
Senior Vice President
Since 1971, ISO has been a leading source of information about property and liability risk. Our statistical, actuarial, and underwriting information is a vital resource for insurers, and our standardized policy language is the foundation on which many insurers build their coverage programs.
But today, ISO is so much more.
Building on our expertise in actuarial science, data management, insurance coverages, and many other fields, we've assembled some of the industry's best analytical talent to develop and deliver practical tools for predictive modeling.
The value is clear. Using predictive modeling and other advanced analytics, insurers can identify the underlying drivers of loss, quantify their effects, and price risk with unprecedented precision. If you can do that, your company will be able to write business at the margins you target. If you can't, you may fall victim to adverse selection: You'll charge too much for good risks, and they'll buy their insurance elsewhere. You'll charge too little for poor risks, and they'll flock to you.
The ISO Models and Manuals Initiative
To help you get the most from ISO's analytics, we've developed a long-term action plan we're calling the ISO Models and Manuals Initiative. The initiative gives you a wide variety of options for accessing and using the new insights that come out of our predictive modeling efforts.
Here are the basics:
- We're continually seeking insurer feedback to identify needed refinements to our rating products.
- We're developing new and improved predictive analytics using the power of modeling. ISO Risk Analyzer® is our suite of models that examine hundreds of indicators and predict expected losses at the policy level by major coverage or peril. You can use the output of those models as stand-alone analytics to help classify, segment, and/or price your insurance risks with confidence.
- Our predictive modeling efforts also let us offer intelligent variables — we call them components — that you can use as inputs to your own models.
- We're mining the information produced by our predictive analytics to develop improved classification and rating variables for our traditional line-of-insurance manuals.
ISO's models will give you a competitive advantage. It doesn't matter if you're:
- building your own models
- looking to buy and customize a modeling system
- looking to buy a turnkey modeling system
- staying with traditional rating methods for now
For more information . . .