In an ultra-competitive P&C insurance market, effective use of predictive analytics helps insurers retain their existing policyholders. That’s according to the “2014 Predictive Modeling Survey” by professional services company Towers Watson.
Fifty-five percent of the 52 P&C insurers surveyed said predictive analytics had helped them renew customers, according to the company. Overall, insurers see positive results from predictive analytics technology on both the top line and bottom line. Profitability (87 percent), rate accuracy (98 percent), underwriting appetite (46 percent) and market share (41 percent) were among the metrics that showed marked improvement, according to survey respondents.
Almost all (97 percent) of personal auto companies say they use predictive analytics somewhere in the business. Among business lines broken out, specialty lines (13 percent) reported the least use. However, 45 percent of specialty insurers surveyed say they plan to use predictive modeling soon.
“As the use of predictive modeling extends to more lines of business, there is an increasing depth in its use,” says the report, which was authored by Klayton Southwood and Brian Stoll. “Survey participants report plans to deploy predictive modeling applications in areas including claim triage, evaluation of litigation potential, target marketing and agency management. These applications will favorably impact loss costs, expenses and premium growth.”
