The Promise of Predictive Models
An innovation strategy around big data and artificial intelligence will uncover insights that allow smart carriers to acquire the most profitable clients and avoid the worst.
Companies that develop the best portfolios of risks will ultimately enjoy a flight to quality while those left behind will compete for the scraps of insurability.
Insurers are also trying to individualize underwriting rather than use the traditional underwriting of risk categories.
As such, the insurance industry finds itself in a data arms race. Insurance carriers are leveraging their datasets and engaging with insurtechs that can help.
For the underwriter, big data analytics promise the ability to make better decisions with respect to risk selection and pricing. Underwriters have thought too many times that if they had just understood a particular area of risk better they would have charged a lower price and won the business; or had they had that little extra piece of information they would not have written an account that turned out to be unprofitable.