Article Synopsis :
Predictive analytics has been used for some time in non-life insurance underwriting, but insurers have started acknowledging the business benefits as a result of its inclusion across digital touch points. Predictive analytics is expected to help insurers in reducing marketing costs, improving client conversion ratio, maintaining brand loyalty and dealing with the complexity of new distribution channels while remaining competitive.
In its white paper on predictive modelling, The American Institute Chartered Property Casualty Underwriters (AICPCU) summarises the predictive analytics process (Data Mining, Model Development and Model Validation) and its usage in the field of marketing, underwriting, claim settlements and fraud detection by insurers.
The white paper identifies the key drivers in the use of predictive analytics by insurers:
1. Technological advances
2. Data availability
3. Insurers’ desire for growth In slow-growth markets
4. Insurers’ search for competitive advantage
The white paper also puts forward an unbiased view on the advantages and disadvantages of predictive analytics for insurers.
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