Actuaries use tables to predict risk based upon factors like age and gender for car or health insurance, and ethnicity, income, and community education levels for property insurance.
Predictive analytics lets insurance companies get more granular, analyzing an individual’s account data to determine risk, said Richard Boire, partner at Boire Filler Group, in a phone interview earlier this week.
“What we’ll do is we’ll take [an individual policyholder’s account] and we’ll look at the history,” Boire told us. With predictive analytics, insurance companies can mine historical data on policyholders, looking back 12 months for additional claims or other changes that might result in a different overall risk score.
In the case of property insurance, for example, including riders for building additions or other property alterations usually affects overall risk score, Boire said.
Boire Filler, in Pickering, Ontario, just east of Toronto, builds predictive analytics models for Canadian insurance companies. Its clients can then set individual policy prices based on changing risk factors.
For example, a female driver in her 20s would have a lower risk score and lower insurance rate than a male of the same age. However, the same female driver with three new claims on her auto insurance over the last 12 months would see her risk score climb significantly.
Conversely, a 20-year-old male who would normally see a high risk score based on age and gender might see that drop with a long enough driving history free from any claims. Heck, if this guy also wants property insurance his good driving may earn him points there, too. See this video blog on how one insurance company apparently has found a connection between lousy driving and careless home ownership.
Boire will join us Friday, March 2, for a live e-chat on predictive analytics in insurance pricing at 2 p.m. EST here on AllAnalytics.com. He will answer questions about how to best use data mining tools to detect risk scores for individual policyholders. If you're attending next week's Predictive Analytics World conference, in San Francisco, you can catch him there, too. Boire will be presenting on Monday, March 5.
How might the insurance industry benefit from predictive analytics in your view? Leave your thoughts on the board below, and be sure to join us for the live chat on Friday and feel free to drop some questions in the chat interface before the event to get us started.
Thanks everyone for joining us in today's e-chat on predictive analytics in the insurance industry and thanks for staying late! You can check out the full archive above and share the link with a friend. Thanks again!
Predictive analyses are commonly used for credit scoring purposes. Here the accuracy and usability of results greatly depends on level of data analysis and quality of assumptions. This credit scoring has direct impact in fixing the policy premium and in financial services. In most of the cases the lending rates are proportional to the credit history and term risk. When companies are charging more premiums for customers with a bad credit score, others who are having a good credit score are not getting the benefits in same proportion.
I mean such analysis are using only for extracting more from customers based on different risk level and not for passing any benefits to them in return.
Diego Klabjan, chair of the INFORMS University Analytics Program Committee and program director for Northwestern University's Master of Science in Analytics program, gives his advice for figuring out where to get an advanced analytics degree.
What Works: Open Source Analytics Software International Institute for Analytics WebinarOn Wednesday, Sept. 24, join IIA CEO and Co-Founder Jack Phillips, along with featured guest Gary Spakes, as we explore the five modernization stages that analytics hardware/software have experienced. We will discuss the considerations when calculating total cost of ownership of the analytics ecosystem.
2014 VA Interactive Roadshow -- Cary, NCThe 2014 VA Interactive Roadshow will feature SAS® Data Management and SAS® Visual Analytics experts covering topics like prepping data for VA and VA integration with SAS® Office Analytics. This year's events will keep presentations at a minimum and focus on giving attendees hands-on exposure to the latest version of VA.
Essential Practice Skills for Analytics Professionals Drawing on best practices from the field, this INFORMS course helps analytics professionals add value from beginning to end: listening to clients, framing the central problem, scoping a project, defining metrics for success, creating a work plan, assembling data and expert sources, selecting modeling approaches, validating and verifying analytical results, communicating and presenting results to clients, driving organizational change, and assessing impact.
Analytics 2014 The Analytics 2014 Conference is a two-day, educational event for anyone who is serious about analytics. This annual event brings together hundreds of professionals, industry experts and leading researchers in the field of analytics. All Analytics members save $500 on conference fees by using promo code ACAA.
Premier Business Leadership Series 2014 The Premier Business Leadership Series is an exclusive event for senior executives and decision makers that focuses on solving the current issues that affect governments and businesses globally. The Series is a unique learning and networking experience focused on the most innovative leadership strategies and analytic solutions for competing in todayâ€™s global economy.
2014 VA Interactive Roadshow -- BostonThe 2014 VA Interactive Roadshow will feature SAS® Data Management and SAS® Visual Analytics experts covering topics like prepping data for VA and VA integration with SAS® Office Analytics. This year's events will keep presentations at a minimum and focus on giving attendees hands-on exposure to the latest version of VA.
Data Exploration & Visualization Get hands-on training that focuses on the critical steps in the process of analyzing data: accessing and extracting data, cleaning and preparing data, exploring and visualizing data. This INFORMS course will use several of the most popular software tools intensively, and provide an overview of the range of software options.
Foundations of Modern Predictive Analytics In this INFORMS course, learn about modern predictive analytics, the science of discovering and exploiting complex data relationships. This course will give participants hands-on practice in handling real data types, real business problems and practical methods for delivering business-useful results.
2014 VA Interactive Roadshow -- AtlantaThe 2014 VA Interactive Roadshow will feature SAS® Data Management and SAS® Visual Analytics experts covering topics like prepping data for VA and VA integration with SAS® Office Analytics. This year's events will keep presentations at a minimum and focus on giving attendees hands-on exposure to the latest version of VA.
LEADERS FROM THE BUSINESS AND IT COMMUNITIES DUEL OVER CRITICAL TECHNOLOGY ISSUES
The Current Discussion
Visual Analytics: Who Carries the Onus? The Issue: Data visualization is an up-and-coming technology for businesses that want to deliver analytical results in a visual way, enabling analysts the ability to spot patterns more easily and business users to absorb the insight at a glance and better understand what questions to ask of the data. But does it make more sense to train everybody to handle the visualization mandate or bring on visualization expertise? Our experts are divided on the question. The Speakers: Hyoun Park, Principal Analyst, Nucleus Research; Jonathan Schwabish, US Economist & Data Visualizer
The hospitality industry gathers massive amounts of customer data, and mining that data effectively can yield tremendous results in terms of improved CRM, better-targeted marketing spend, and more efficient back-end processes. Roger Ares, vice president of analytics at Hyatt Corp., discusses the ways he and his staff use big data.
Charged with keeping track of travel assets, including employees, iJET International relies on data management best-practices and advanced analytics to keep its clients in the know on current and potential world events affecting travel, Rich Murnane, Director of Enterprise Data Operations & Data Architect, told All Analytics in an interview from the 2014 SAS Global Forum Executive Conference.
Jason Dorsey, chief strategy officer for the Center for Generational Kinetics and keynote speaker at last month's SAS Global Forum 2014, describes how Gen Y professionals are enhancing the makeup of multigenerational analytics organizations.
From analytics talent development to the power of visual analytics, All Analytics found a variety of common themes circulating throughout the exhibition floor and session discussions at the 2014 SAS Global Forum and SAS Global Forum Executive Conference events held last month in Washington, DC.
Talking with All Analytics live from the 2014 SAS Global Forum Executive Conference, Eric Helmer, senior manager of campaign design and execution for T-Mobile, discussed the importance of customer data -- starting internally -- in devising the mobile operator's marketing plans.
The big-data analytics market can be a confusing place. Among the vendors vying for your dollars are traditional database management providers, Hadoop startup services, and IT giants. In this video, All Analytics editors Beth Schultz and Michael Steinhart sit down in a Google+ Hangout on Air with Doug Henschen, executive editor of InformationWeek. Henschen discusses use cases for big-data analytics, purchase considerations, and his recent roundup of the top 16 big-data analytics platforms.
At the National Retail Federation BIG Show last month, All Analytics executive editor Michael Steinhart noted a host of solutions for tracking and analyzing customer activity in retail stores. From Bluetooth beacons to RFID tags to NFC connections to video analytics, retailers must find the right combination of tools to help optimize the shopper experience, streamline operations, and boost revenues.
The days when historical shipment trends and gut feelings were enough to forecast retail demand accurately are long over. SAS chief industry consultant Charles Chase outlines the benefits of pulling real-time sales information from point-of-sale and product scanner systems, then flowing that data into dynamic forecasting tools from SAS.
With today's advanced visual analytics tools, you can stream data into memory for real-time processing, provide users the ability to explore and manipulate the data, and bring your data to life for the business.
Dynamic data visualizations let analysts and business users interact with the data, changing variables or drilling down into data points, and see results in a flash. Advance your use of data visualization with tools that support features like auto-charting, explanatory pop-ups, and mobile sharing.
No doubt your enterprise is amassing loads of data for fact-based decision-making. Hand in hand with all that data comes big computational requirements. Can traditional IT infrastructure handle the increasing number and complexity of your analytical work? Probably not, which is why you need a backend rethink. Big data calls for a high-performance analytics infrastructure, as Fern Halper, a partner at the IT consulting and research firm, Hurwitz & Associates, discusses here.
Redbox's bright-red DVD kiosks are all but ubiquitous these days, located in more than 28,000 spots across the country. Jayson Tipp, Redbox VP of Analytics and CRM, provides an insider's look at how the company has accomplished its phenomenal nine-year growth.
InterContinental Hotels Group (IHG), a seven-brand global hotelier, has woven analytics into the fabric of its operations. David Schmitt, director of performance strategy and planning, shares IHG's analytics story and his lessons learned.