Risk Selection Has Evolved
We get asked one question all the time: “With all of Valen’s data, can’t you just tell me what types of business to avoid so I don’t write bad risks?” Unfortunately, the answer is that if you could improve performance by simply cutting out entire segments of the market, everyone would do it. The reality is there are good and bad insurance policies in every segment of the market, and you need to enable your underwriters with the best information to make that determination. The good news is that advanced data analytics provides these powerful insights at the moment in time your underwriters need to make key decisions.
Whacking out big areas of the market?
Using blunt force tools for risk selection won’t help you remain competitive in today’s market. Within all classes of business are policies that fit your underwriting appetite. Advanced analytic tools help you identify where to target new business.
Know your performance now
Hindsight will cost you – your competitors aren’t waiting 12-18 months to know how their policies will perform.
How would you improve risk selection if you could forecast accident year loss ratio in June? That’s what embedded profit shows. The forward-looking statistics from predictive analytics offer a new set of portfolio-level management tools.
The race is on for the top 10%
Discovering that just 10% of your book contributes over 50% of expected profit, shows how the rules are changing. This commercial lines study points to the real advantage – and potential threat – of data analytics in risk selection. The insurer who can accurately identify the best 10% of the market is better equipped to win this business.