Valen Analytics Quantifies the Effects of Adverse Selection in 2015 Commercial Lines Outlook Report

Company Discusses Industry Threats, New Competition and Data-Driven Decision Making; Features Loss Ratio Impact of Predictive Analytics

Valen Analytics, a provider of proprietary data, analytics and predictive modeling to help insurers manage and drive underwriting profitability, today released its 2015 Outlook: Commercial Lines report, addressing the top challenges and opportunities in the industry. As insurers face rapidly changing market dynamics and the likelihood of disruption, Valen’s report highlights the need to accelerate adoption of data analytics in order to protect market share from top insurers and non-traditional competitors alike.

Valen’s report highlights the growing threat of adverse selection, showcasing the loss ratio impact amongst three groups: insurers that adopt predictive analytics, those who price match their competitors but do not mitigate against their worst-performing risks, and those who have their best business stolen from analytically-driven competitors. On average, insurers that are vulnerable to analytical competitors will experience a loss ratio shift of -19.7%.

“We’re starting to see a division between the ‘winners’ and ‘losers’ of adverse selection emerge in today’s shifting landscape,” said Dax Craig, CEO and president of Valen Analytics. “It’s an increasing concern within commercial lines because the impact is oftentimes invisible until after the damage has been done to a portfolio. The good news is that the opportunities to compete in today’s fierce market are there for those who prioritize data and analytics. ”

Valen used proprietary research to quantify the benefits of analytics in underwriting, and presents best practices for insurers who are just starting with predictive data.  The report outlines:

Top Three Threats in Commercial Lines

  • Increasingly sophisticated underwriting and pricing models
  • Market consolidation
  • New industries entering insurance and the 24/7 customer

Data-Driven Decision Making

  • How and why insurers are becoming data-driven
  • Solving data and predictive modeling issues

Hard Numbers on Adverse Selection

  • Loss ratio benefit
  • Cost of doing nothing
  • Profit vulnerability

The 2015 Outlook: Commercial Lines report, along with several complimentary resources on the latest underwriting techniques and pitfalls to avoid, can be found in Valen’s Resource Center at www.valen.com. Readers are encouraged to register for a webinar to discuss the report’s findings on December 9, 2014.

About Valen Analytics
Valen Analytics is an advanced data and analytics provider for property and casualty insurance companies. We work with insurers who are actively looking to improve underwriting profits by driving growth and/or lowering their loss ratio. Our customers are focused on increasing competitive pressures, fighting adverse selection with innovative solutions, and raising awareness for the impending “experience gap” in underwriting with initiatives such as Tomorrow’s Talent Challenge. Our customers span many lines of business including Homeowners, Workers’ Compensation, Commercial Auto and Telematics, Commercial Package, Commercial Property, and BOP. Learn more about Valen at www.valen.com.