How a Holistic Approach to Decision Making
Can Help Insurers Build a Profitable Book of
Business
An Insurance & Technology Editorial Webcast Sponsored by:
Today’s Presenters
• Kathy Burger, Editorial Director, Insurance & Technology
(moderator)
• Gail E. McGiffin, Global Lead, Underwriting, Accenture
• Scott Horwitz, Senior Director, FICO
• Lamont D. Boyd, CPCU, AIM, Insurance Market Director,
Global Scoring Solutions, FICO
Agenda
• Assessing the challenges facing insurance IT organizations
today ‐‐ and what this means in terms of capabilities for
improving customer retention and driving growth.
• Competing as a price optimizing organization – what are the
necessary tools, processes, structures?
• Better decision making on the front lines.
• Key differentiating technologies and strategies.
• Q&A and follow‐up.
Insurance/FS at a Crossroads?
• Far‐reaching (and still unknown) impact of financial/credit
crisis, economic downturn, recession – cautionary for insurers
(it’s not just about banking).
• FS industry is remade & realigned – erstwhile powers are
weakened (or gone), new competitors emerge.
• Right now: It’s all about trust (or lack of it).
• Assumptions about risk, competition, growth
under fire (or being reconsidered in emerging
new regulatory environment.
• IT wasn’t part of the problem, but it will be part of the
solution (be careful what you wish for).
Macro Impact on Insurance IT
• IT budgets under pressure – tight, but not
butchered. More doing more with less.
Resource maximization more critical than ever.
• Increased (if possible) emphasis on removing
costs, inefficiencies from processes, improving
deliverables (speed‐to‐market, compliance,
retention, etc.), and refining metrics (ROI, TCO).
• More need than ever for infrastructure & technologies that
enable flexibility, interaction, measurement.
• Know your customers – insight that drives underwriting,
sales, product development, service.
Some Windows of Opportunities
• Speed to market, customer/employee
experience – IT plays a critical role (new
products, service, social media,
STP, etc.).
• Optimizing multi‐channel distribution – anticipating,
supporting needs of distributors and customers.
• Web 2.0 for interaction and collaboration.
• New/updated regulation will demand transparency and
enhanced capabilities (analysis, reporting, documentation,
etc.), which can be leveraged.
• Mastering the balancing act between risk management and
growth.
Shifting Investment Priorities?
• Analytics, models, rules – for customer, channel, competitive
insights, plus enabling targeted pricing & profitable customer
segmentation, product development.
• Better alignment, collaboration, information
sharing. Web 2.0 for business.
• Customer (policyholders & distributors)
experience.
• Standards‐based architectures/infrastructures – to support
growth, STP, integrated view, compliance, etc.
• BPM, governance – keys to compliance, maximizing
resources, deliverables, transparency. No surprises.
Unlocking the Value of
Enterprise Decision Integration
Gail Mc Giffin
Partner, Global Underwriting Solutions Lead
Economic and competitive trends are reshaping the Insurance industry
Over the past 5 – 10 years, both industry consolidation and a booming economy have redefined the insurance
landscape, introducing complex challenges that require more sophisticated approaches to decision
management.
Performance Management
Refined product targets for Policy servicing rules are Predictability in loss types
urban vs. suburban/rural Focused sales aligned to High hit ratios for submitted synchronized with sales based on product/customer
territories UW appetite, product rules new business and UW strategies profiles
and competitive pricing by Pricing/coverage can be Tighter linkage between
Optimized pricing models customer type by territory Loss coding better aligned
by type of store by territory elasticized for best risks UW rules and to UW/policy coding
form/issuance rules
Performance Management
Target mix achieved for desirable SICs, territories, agents and size.
Compelling new product offering penetrates market with higher growth rate.
ETL
Cleansing Rules/
UW Rules Rules Production
3rd Party Matching Pricing Rules
(incl Predictive Engine
Profiling Models) Impact
DW Quality
Integration
Augmentation
Claims Form Forms Form
Rules Engine Production
Impact
Sample Forms
Policy
Data Sets
Product Definition
Data Validation
Data Derivation Pricing Price Level Selection
Product Configuration
Display Formatting
Form Definition
Illustrative
Testing
Project Management
Software Testing Track Rule Testing Track
Object Model Rule Management
Change Software QA Ruleset Rules System Test Test Data Management
Dependencies Workstream Ruleset Testing Automated Regression Testing
System Testing Best Practices
Rule Execution Rule Rule Unit Testing Business Outcome Testing
Software Development
Workstream Workstream
• Gain insights for • Identify potential • Speed risk selection and • Increase ability to • Improve timeliness and • Improve consistency in
creating more tailored sales more precisely quoting with better enhance servicing for accuracy of fraud metric management for
products by analyzing alignment between risk the most valuable detection the organization
• Improve ability to customer purchasing quality and pricing customers and • Enhance resource • Improve alignment
deploy new products patterns (reduced leakage) distributors allocation and between internal and
effectively (filing • Enhance agency • Provide timely insight into • Lower costs of prioritization with better external data quality
strategies, training, recruiting capabilities price tiering models (eg., processing with insight and and reporting
marketing) • Optimize distribution predictive models) to enhanced insight into predictability into claim standards
• Enhance primary and compensation adjust models for more performance of complexity and • Achieve greater
secondary research models targeted marketing operational staffing settlement potential granularity and
focus • Improve prediction of • Identify non-core models • Improve subrogation timeliness in reporting
• Leverage product product preferences underwriting operational • Gain insight into predictions for improved insight
performance metrics to and customer activities that are process bottlenecks • Enhance reserving and regulatory
improve business rules retention candidates for automation, and detailed practices compliance
and operational elimination or delegation transactions to • Gain operational insight • Increase user
efficiency • Improve utilization of identify to increase levels of sophistication in
underwriting services improvements in automation for simpler performance analytics
(premium audit, loss policy automation claims through improved data
control) management and
• Provide more accurate, analytic technologies
timely and detailed
understanding of exposure
accumulation
July 9, 2009
Confidential. This presentation is provided for the recipient only and cannot
be reproduced or shared without Fair Isaac Corporation's express consent.
© 2009 Fair Isaac Corporation.
FICO is the leader in Decision Management —
transforming business by making every decision count
Over 400 insurers have used FICO solutions to create competitive advantage
Customer Agent
Agent Portal
Kevin Smith directing Kevin Smith Kevin is denied the offer as
him to visit his agent visits his agent information regarding
to get a free rider on to get the offer Kevin’s pre-qualification
homeowner policy was not fully integrated
into underwriting system
Customer Agent
Composite Risk
Assessment
Analytics
6 Fraud
Marketing
Offer Credit Based Claims Assessment
Analytics Insurance Scoring History Analytics
Analytics Application
3 2 Data Validation 4 5
1
Claims /
Marketing Underwriting
Reserving
Product Policy
Fraud
Management Administration
Utilizes marketing, CBIS, underwriting and claims analytics to determine any complimentary products -Increased revenue/profit potential
8 or offerings that should be packaged with the requested coverage to cross-sell, up-sell or enhance through identification of additional
conversion rate for high value customers. opportunities
Agent Customer
Presentation
Tier
FICO’s leading Decision Management solutions enable carriers to develop more precise
insights and implement optimized strategies that connect decisions and extract the value
that lies between lifecycle functions
© 2009 Fair Isaac Corporation. Confidential.
FICO Technologies Help Insurers Achieve the
Competitive Advantage of Connected Decisions
FICO Decision Key Benefits to the New Business Process
Management Solutions
FICO Blaze Advisor » Automates the underwriting process by incorporating a carrier’s
Business Rules underwriting guidelines within the rules repository
Management
» Improves the agility of new business and product development
processes by giving business managers more control
» Allows for consistent decision making across the underwriting
decision lifecycle
» Allows carrier’s to scale their business without the need to add
additional underwriting staff
FICO Predictive Analytics »Improves the precision of existing rating methodologies; assists
existing underwriting systems to make more accurate decisions
»Improves a carrier’s ability to predict or anticipate a customer’s
reaction to discrete offers
»Allows carriers to analyze customer acquisition and attrition patterns
(Industry-Standard Scores and
Custom models) and make predictions based on those patterns to acquire and retain
customers
FICO Decision »Improves a carrier’s ability to develop business strategies based on an
Optimization optimized view of business objectives and associated constraints
»In some cases allows carriers to incorporate strategies real-time
July 9, 2009
Confidential. This presentation is provided for the recipient only and cannot
be reproduced or shared without Fair Isaac Corporation's express consent.
© 2009 Fair Isaac Corporation.
Q&A
please submit your question now
• Kathy Burger, Editorial Director, Insurance & Technology
(moderator)
• Gail E. McGiffin, Global Lead, Underwriting, Accenture
• Scott Horwitz, Senior Director, FICO
• Lamont D. Boyd, CPCU, AIM, Insurance Market Director,
Global Scoring Solutions, FICO
Resources
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