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Connected Decisions:

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.

• Lack of Offering • Changing Agent/Broker


Differentiation Landscape
– Return of Global Broker focus
– Undifferentiated products/services
on MM segment
– Limited cross-selling
– Emergence of new National
– Large-grained industry and customer Emerging Landscape Brokers from M&A
segmentation
– Disappearance of Local
Independent Agencies
• Talent Erosion – Repositioning of Captive
– Exodus of UW/Claims technical channel
experience
– Reduced recruiting/training spend • Emerging Environmental
– Deficient sales skills at customer Issues & Exposures
interaction points > Economic & Competitive Trends < – Expanding definition of terrorism
– Virtual globalization of business
• Inconsistent, Manual exposures
Processes – Climate change-related
catastrophes
– Limited technology enablers
– Lack of data and technology
integration • Increasing Market
Pressures
• Lack of Sophisticated, Historical Landscape – Economic crisis
Granular Insight – Increasing federal oversight
– Immature BI Capabilities – Cross-border M&A activity
– Limited Use of 3rd Party Data
– Limited Use of Predictive Modeling
© 2009 Accenture. All rights reserved. 9
Insurers that maintain insight and business rules in functional silos experience
sub-optimal decision making and therefore sub-optimal results.

Market Research & Sales & Underwriting & Policy


Claims
Product Development Distribution Pricing Administration

Target customer segment


for new product = Boutique Sales force in certain New business application
Stores territories discovers that #1 --- urban jewelry store Thirty days after policy is Claim submitted for loss of
Target profile = sales < retail store business is submitted and quoted. issued, endorsement animal inventory due to
$5m, suburban or rural controlled by specific Tier Quote rejected as not request submitted to call water contamination.
territories, Tier I and II III agents writing with competitive center to add coverage for Adjuster pays claim and
agents smaller, local insurers New business application animals. closes out file.
Products = BOP, Auto, WC, Given new product launch #2 – suburban pet store CSR processes Claim department knows
Umbrella in the market and submitted and quoted immediately based on tier this type of claim is typical
Special coverage forms, aggressive sales goals, successfully (policy written) of agent (Tier I) and target with pet stores rather than
proprietary rating, local sales managers for Tier I agent. nature of account. mortality claims.
predictive pricing model decide to pursue these Tier UW rules dictate exclusion
III agents for the business. for animal mortality.

Performance Management

Boutique stores results are marginal due to lack of penetration


with Tier I and II agent expectations and adverse selection in urban territories.

© 2009 Accenture. All rights reserved. 10


This decision leakage can proliferate across the value chain thereby compounding
the resulting impact.

Market Research & Sales & Underwriting & Policy


Claims
Product Development Distribution Pricing Administration

Target customer segment


for new product = Boutique Sales force in certain New business application
Stores territories discovers that #1 --- urban jewelry store Thirty days after policy is Claim submitted for loss of
Target profile = sales < retail store business is submitted and quoted. issued, endorsement animal inventory due to
$5m, suburban or rural controlled by specific Tier Quote rejected as not request submitted to call water contamination.
territories, Tier I and II III agents writing with competitive center to add coverage for Adjuster pays claim and
agents smaller, local insurers New business application animals. closes out file.
Products = BOP, Auto, WC, Given new product launch #2 – suburban pet store CSR processes Claim department knows
Umbrella in the market and submitted and quoted immediately based on tier this type of claim is typical
Special coverage forms, aggressive sales goals, successfully (policy written) of agent (Tier I) and target with pet stores rather than
proprietary rating, local sales managers for Tier I agent. nature of account. mortality claims.
predictive pricing model decide to pursue these Tier UW rules dictate exclusion
III agents for the business. for animal mortality.

•Inadequate competitor & •Service segmentation


•Lack of insight from prior
market analysis •Misalignment in sales not aligned with •No insight into UW rules
claims experience
•Gap in product vs. selling expectations and UW risk segmentation •No feedback loop
•Lack of sales/agent insight
rules appetite & pricing rules •Lack of insight into UW into PD/UW
In market analysis
Intent/rules

Lack of integrated decisions and insight results in


unfavorable/unintended results
© 2009 Accenture. All rights reserved. 11
Shared insight and integrated business rules enable more interconnected decisions
across the enterprise.

Market Research & Sales & Underwriting & Policy


Claims
Product Development Distribution Pricing Administration

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.

© 2009 Accenture. All rights reserved. 12


Integrated decisioning can dramatically reduce decision leakage and provide a
competitive advantage in the marketplace

High Performance Decisioning Benefits

Better synchronization of rules and analytics • Improved loss ratio


• Product eligibility/targeting • Focused and targeted growth (better hit
• UW appetite/pricing and retention ratios)
• Workflow, work assignment • More optimized book mix
• Sales approach • Easier to do business with
• Policy forms, billing options by product/agent • Better customer experience
• Claim processing • Fewer errors, less rework
• More granular insights to refine products,
services and processing as a competitive
edge
•More integrated insights
• Claims experience Æ Product development
• Sales/marketing Æ PD/UW
• PD/UW Æ Policy processing

© 2009 Accenture. All rights reserved. 13


An enterprise rules and analytics platform is required to support integrated
decision solutions.

Accenture’s Integrated Decision Solution for Product Management

Analytics Product Configuration/Testing/Deployment Production


(Transaction
Customers Geographies Product Testing Impact Systems)
Definition Interfaces Analysis
Agencies Competitors Production
Rating Premium Rates
Rates Displacement
Data Services Engine

ƒ ETL
ƒ Cleansing Rules/
UW Rules Rules Production
3rd Party ƒ Matching Pricing Rules
(incl Predictive Engine
ƒ Profiling Models) Impact
DW ƒ Quality
ƒ Integration
ƒ Augmentation
Claims Form Forms Form
Rules Engine Production
Impact
Sample Forms
Policy
Data Sets

Development Applications Performance Data

Forms Rules Rating Forms Mods / Rules


Application Application Application Selected Factors Fired

© 2009 Accenture. All rights reserved. 14


A Rule Taxonomy helps to govern and direct decision behavior across the
enterprise
Illustrative

- Sample Rule Category to Sub-Category Mapping –

Product Definition
Data Validation
Data Derivation Pricing Price Level Selection
Product Configuration
Display Formatting
Form Definition

Information Needs Rate Order


Identification
External Information Premium Calculation
Ordering
Data Reconciliation Rate Step

Acceptance Process Management


Eligibility Workflow
Referrals Task Management

© 2009 Accenture. All rights reserved. 15


A Rules Extraction Process helps ensure both programmatic and human decision-
making elements are codified.

Prepare Extract Validate Operate


Existing New Rule Validation
Initial Rule Rule Operational On-Going
Framework and
Preparation Framework Extraction Rule Testing Maintenance
Creation Translation
Analysis

1-2 Months 4-8 Months 4-6 Months 1-2 Months


•Determine scope of extraction/ •Perform manual review of •Perform Detailed Rule Review with •Develop and confirm rules
management effort – e.g. 1 state, 1 line of documentation (e.g., manuals) SMEs to ensure extraction accuracy maintenance processes
business, type of rules
•Interview functional resources to •Consolidate/rationalize inaccurate and •Install analysis and
•Secure resources understand variations from documented duplicated rules feedback loop among rule
rules (e.g., actuaries and field maintenance,
•Conduct initial interview of functional •Establish rule test environments
operations personnel) underwriting, product
SMEs to compile list of rule sources (e.g. infrastructure
development and other
rate plans, guidelines, individuals etc) •Interview systems resources to make
•Develop and confirm testing process involved capabilities
code dive decisions
• Conduct initial interview of technical flow and signoff criteria
•Determine metrics that will
resources to identify existing rule •Perform automated and manual review
•Perform rule testing – unit, system, be collected and develop
locations in legacy environment (“code dive”) of rules within systems
client acceptance capabilities to support that
• Confirm location of Central Rule •Create rule decision trees reporting
•Revise extracted rules to ensure match
Repository (database) and determine if
•Build Roadmap to prioritize when certain to target system
build activities are necessary
rule types/categories should be targeted
•Obtain sign-off on results of validation
• Catalog Rules – establish rule for extraction activities
and operational rule testing activities
types/categories via functional walk-thrus
•Document extracted rules in centralized
of each transaction type and technical •Complete build-out of the business rules
repository
discussions workbench
•Design, configure, and build central rule
•Document existing rule framework by •Develop training to support use of the
repository (if required)
mapping rule types/categories to legacy business rules workbench
environment •Design and build business rules
workbench (e.g. rules maintenance
© 2009 Accenture. All rights reserved. facility) 16
Key Roles and Responsibilities should be established to support this higher level
set of analytics and decision capabilities

Illustrative

Rules Architect Rule Librarian Specialists for Each Product/Line/State


•Provides a program-wide view of rules activities and • Overall responsibility for maintaining line of business and/or
application architecture decisions business unit (i.e. underwriting) specific business rules
•Oversees maintenance of the centralized rules repository •Works with actuarial, underwriting, product and systems
•Creates and maintains a decision tree to facilitate organizations to ensure rules are defined and implemented
consistent deployment decisions correctly
•Tracks extraction activity across the project to be sure that •Has authority to make decisions about product rules and
rules are made available to facilitate design activities implementation within the new environment
• Provides point expertise for all related rules activities •Provides guidance to line of business/region on product
including identification, extraction, deployment and testing strategy
•Understands impact of rule changes on systems
•Maintains and enters rules
Rules Analyst
•Reviews the materials available to identify and extract the
Centralized Rules Repository/Business Rule Workbench
existing rules (through manuals, interviews, etc.)
Developer
•Documents rule categorizations, inventories, and
•Assists development of centralized repository/business rules
application mappings
workbench
•Develops future business rule capability requirements
•Develops front and backend components related to rule
•Documents the rules in the Rules Repository
management infrastructure
Enterprise Product Rule Manager
Technical SMEs for Each System
•Overall responsibility for maintaining enterprise business
•Understands the implementation of all products within a given
rules
system
•Liaison to actuarial, underwriting, product, and systems
•Able to read the code and understand the system architecture
organizations
•Provides guidance and strategy to the stakeholders
Functional SMEs for Each Product/Line/State
around rule definition
•Understands how products/rules are implemented in current
•Supervises line of business rule librarians
systems
•Responsible for maintaining integrity of the rules process,
identifying improvements where necessary
© 2009 Accenture. All rights reserved. 17
An Enterprise Rules Architecture supports the lifecycle of analysis, rule
configuration, rule testing, rule deployment and rule performance measurement to
industrialize decision management solutions.

Rule/Rate/ Product Management Information


Implementation Approach Management Tools Rule
Business
Results
Decisioning Versioning Meta-Data Testing Facility Simulation
Reporting
Technology Approach Approach Migration Facility Portal
Rule Change Research
Reporting Facility Impact Analysis
Rule Reference Rules
Organization
Construct Data
Approach Authoring Facilities Enterprise
Type Approach
Repository Data Warehouse
Versioning
Integration
Technical Architecture Applicability Type-Specific
Repositories
Rule Query
Rule Service
Security
Partitioning
Firings
Ambiguity Checking
Harvesting
Reference
Persistence
Copy and Paste Data Product &
Rule Management Methodology Process Librarian
Rule Organization
Performance Repository SMEs
Deployment
Architecture

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

© 2009 Accenture. All rights reserved. 18


This architecture should be supported by an enterprise Analytics
Framework…

Insurance Value Chain Analytics Framework

Enhanced Enterprise and Core Capability Decision Making

Product Marketing & Pricing & Policy Performance


Claims
Development Distribution Underwriting Processing Management

• 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

© 2009 Accenture. All rights reserved. 19


…including detailed KPIs for targeted areas of decision
analysis.

Product Marketing Sales Pricing/ Underwriting Servicing Claims Corporate


Actuarial Performance
Product Research
• Market • Agent Performance/ • Pricing • UW Productivity
• Market Territory • Service Channel • Claims • Planning/
Penetration Profitability Analysis Performance
Analysis • UW Expense Analysis & Assignment and Budgeting
Analysis including Tool
• NB & Quote Flow Analysis Optimization Routing • Growth Analysis
• Market Segment Usage
• Strategic • Hit and Yield • SLA Mgmt • Service Channel • Fraud Detection
Analysis • Predictive Model • Book Mix and
Demographic Analysis Segmentation
• Competitor Analysis inputs/outputs/final • Appetite Analysis • Formula Based Portfolio Analysis
Analysis
• Cancellation • Segmentation • Knowledge Reserving • Profitability
• Distributor Analysis • Competitor • Predictive Model
Analysis Analysis Management • Reserve Analysis Analysis
Product Design/ Analysis deviations from
Performance • Retention Analysis Baseline • Book Mix Analysis • Content • Claims Handling • Marketplace
• Agency/ Management
• in-Force Strategy • Predictive Model • Hit and Yield Effectiveness Analysis
• Historical Product Distribution
Analysis • Agent/Distribution and UW Rule Analysis • Workflow Analysis • Claims • Competitor
Analysis and
Performance Performance Integrated Analysis • Referral Rates • SLA Mgmt Processing Analysis
• Rate Making
Measurement Analysis • Rate Adequacy • Contact Mgmt Efficiency • M&A Analysis
Analysis • Authority Analysis
• Campaign • Channel/Access Analysis • Turnaround Times • Subrogation • Performance
• Pricing Analysis • Rule Analysis
Effectiveness Method Analysis • Marketplace Analysis Management
• UW Rule Analysis • Price/Credit Analysis • Cycle Times
(Affinity, • Agency Analysis • Straight-through • Resource Attrition
• Loss Experience Management • Agent Performance
Advertising, Lead • Profitability processing volume • Investment
Analysis Analysis by Account/Book
Dissemination, Analysis Analysis
• Contract/ Forms • UW Service • Escalation Analysis
etc.) • Sales Tool Efficiency • Loss Ratio Analysis • Expense Analysis
Analysis Utilization • Reassignment
• Account Rounding • Acquisition Cost • Loss Development • ISO and Bureau
Product Launch • Market Comparison Analysis
Analysis Analysis and Trending Reporting
• ROI Analysis Analysis • Customer
• Customer Value • Compensation • Rate Development • DOI/Statutory
• Product Launch • Competitor Analysis Complaint Analysis
Analysis Analysis and Trending Reporting
Analysis • Quality/Audit • Policy Error
• Relationship • Residual Market Analysis • Taxes, Boards &
• Impact/ Disruption Referral Analysis Analysis
Loads (WC) • Span of Control Bureaus Analysis
Analysis • New Business • Exposure
• Involuntary Book Management Analysis • Voluntary
• What/If Analysis Sourcing Analysis Analysis • Self-service Inquiry /Involuntary
• Regulatory/ Trend • Cross Sell / Up Sell • CAT Management
• Off-Balance Analysis Market Analysis
Analysis Analysis • Loss Experience
Analysis
• DOI Relationship • Lead Management Analysis
• Reserve Analysis
Analysis • Reinsurance
• Expense Analysis Analysis (Treaty,
© 2009 Accenture. All rights reserved. 20 Fac)
The interconnected decision processes must be supported by a set of enterprise
rules services and analytics components that integrate these decisions efficiently
and effectively across an account, and provide real-time insights into decision
outcomes on the book of business.
Enterprise Solution Architecture
Distribution and
Access Methods
Branch Process
User
Email Fax Agent Office Experience
Office Office
Rules
AMS Upload Role Based UI
Workflow
Business Process and Rules
Work Management Orchestration and User Tasks
Sales

Common Architecture Tools and Services


Rules
Product
Business Services and Tools
Rules
Sales and Marketing
Rating & Product Configuration / Identification UW & Tools and Services
Issuance Pricing
Rules Rules
Policy Transaction Underwriting Tools and
Processing Services
Decision Management

Decision Analytics and Rules Management

Data Access Services


Info
Ordering
Product / Sales and
Policy / UW Enterprise Data Sources Rules Third Party Data Sources Marketing
Data Sources Data Sources
Billing &
Rule Claim
Back Office Cancellation
Performance Segmentation
Rules
Downstream and Analysis Rules
Billing Business Intelligence Claims
Reporting

© 2009 Accenture. All rights reserved. 21 21


Connected Decisions
Enhanced Profitability & Sustainable Competitive Advantage

Scott Horwitz Lamont Boyd


Senior Director, Insurance Director, Global Scoring Solutions
FICO FICO

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

Automate Improve Connect


complex decisions decision quality decisions across the
in real time with analytics enterprise
» Increase consistency » Reduce fraud and » Manage across product
claims losses lines and business silos
» Reduce manual reviews
» Optimize underwriting » Execute coordinated
and reserving customer-level strategies

Over 400 insurers have used FICO solutions to create competitive advantage

© 2009 Fair Isaac Corporation. Confidential.


The Concept of Connected Decisions

Connected Decisions is all about taking a wide-angle view of the


business, to see problems and opportunities early enough to take
decisive action to improve results
Connected Decision Principles Operational Benefits Delivered
» Taking a policyholder lifecycle view » Vision: Improved business visibility &
rather than a functional view reporting across the policyholder lifecycle
» Recognizing historical information, » Segmentation: Finer categorization of
previous actions, and current policies at policyholders resulting in better matches
one lifecycle decision can influence between actions, needs and outcomes
decisions at another point
» Lifecycle Coordination: Individual and
» Unlocking efficiency gains and incremental value-add through
competitive advantage that lie between connections that span different decisions
decisions
» Policy & Compliance Management:
Consistent management of policies at all
levels: account, customer, product,
channel
» Time to Market: Shared components
across functions allow quicker spin up of
new products
© 2009 Fair Isaac Corporation. Confidential.
Disconnected Decision - Example
The Independent Agent is
not aware of the promotion
and applies for the coverage
for Kevin

Customer Agent

Marketing offer for Disconnected Decision:

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

Product Policy Claims /


Marketing Underwriting Fraud
Management Administration Reserving

Core Insurance Operations

Potential Cost of Disconnected Decision


» The customer experience with marketing was very good at first, but the disconnect
between marketing and underwriting scars his overall experience with the carrier.
» The independent agent is not only uninformed of promotions, but the bad
experience his customer had with his carrier makes him less loyal to the carrier’s
products in the future
Connecting
Connecting decisions
decisions across
across the
the customer
customer lifecycle
lifecycle unlocks
unlocks the
the efficiency
efficiency gains
gains and
and
competitive
competitive advantage
advantage that
that lies
lies between
between decisions
decisions
© 2009 Fair Isaac Corporation. Confidential.
Connected “New Business” Decision

Customer Agent

Agent or Applicant Requests New Policy


Offer Analytic
Configuration Services Underwriting
8 7 Approval
DECISION
SERVICES
Rules Data
Services Services

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

Core Insurance Operations


© 2009 Fair Isaac Corporation. Confidential.
Connected “New Business” Decision
Decision Services Unlock the Value

Decision Services Descriptions* Value Proposition


Validates the accuracy and completeness of application data using business rules, internal and -Reduces errors in application
1 external data and provides a successful validation or failure with reason codes. Validated applications
are passed to the next step in the new business process, while failures result in a request for missing -Reduces time spent on acquisition
or corrected data.
Pulls a FICO CBIS score from applicable bureau to perform early segmentation of applicant’s risk. If - Better risk segmentation
2 CBIS Score falls within acceptable risk levels, business rules determine additional data requirements
and application continues through the new business workflow. Unacceptable risk scores follow a - Expense reduction in determining
different path, based on state regulatory requirements. additional data requirements for
underwriting decision
Obtains data regarding any current offers the applicant has received or is qualified for and augments - Improved customer service
3 new business workflow with appropriate information.
- Relevant offers presented to
prospects
Pulls any available internal claim/loss history or any required external claim history data as required -Efficient use of internal/external
4 based on data available from previous steps. Allows for internal historical data to be utilized during the information to enhance the risk
process. profile
Utilizes possible prior internal claim history and application information to determine if the applicant has -Early identification of suspicious
5 any positive identification of recent proven of suspected fraud. If applicant has past suspected fraud, risks prior to claim submissions
application is routed by business rules to special resources to determine appropriate action.
Based on CBIS score, application data and additional external data (e.g. MVR, CLUE, etc.) creates - Increased pricing precision based
6 overall applicant risk score for underwriting decision and price tiering. on use of predictive models and
connected internal/external data
Generates an underwriting decision and sets a price for coverage utilizing the composite risk score and -Provides the ability to set
7 business rules. The underwriting decision service can optimize pricing to suit strategic goals and competitive and optimized prices
constraints using optimization models as applicable. for desired customer profiles

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

* Decision Service Descriptions correlate to numbered actions on previous slide


© 2009 Fair Isaac Corporation. Confidential.
Key Enabling Architectural Components

Agent Customer
Presentation
Tier

Agent Portal Web Portal Call Center


Services Tier

Core Insurance Operations


Business

Product Policy Claims /


Marketing Underwriting Fraud
Management Administration Reserving

Decision Management Architecture


Enabling Common Components
Model and
Data Access & Rules Analytics & Case
Rules Reporting
Management Management Optimization Management
Repository

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

© 2009 Fair Isaac Corporation. Confidential.


Value of Connected Decisions

“Sharing data, analytics and intelligence across


the customer lifecycle produces better decisions,
enhanced profitability and a sustainable
competitive advantage for insurers.”

Sample Client Results within Insurance


Policy Solution
Marketing Loss Ratio Fraud
Underwriting Development

30% 99% 8% 35% 50%

Profit per account Straight-thru Decrease in loss Decrease in fraud Decrease in


through cross processing ratio losses through systems
marketing and early identification development time
selling
© 2009 Fair Isaac Corporation. Confidential.
THANK YOU

Scott Horwitz Lamont Boyd


scotthorwitz@fico.com lamontboyd@fico.com

July 9, 2009

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© 2009 Fair Isaac Corporation.
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• 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 
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