dictive and what’s practical from a business standpoint,” he says.
No one would argue that working
with the best possible set of underwriting data is key to creating the most
effective predictive model. But the big-picture view of what it takes—making
the decision, deciding on the most
appropriate data to include, extracting
the data, building the model and final-
ly, implementing it—can be overwhelming at best.
“It really requires a leap of faith,” says
Dove. The company is currently using
Denver-based Valen Technololgies’
UnderRight solution, and Valen integrates third-party data to HEMIC’s own.
“Companies often struggle with how
to effectively use the models that have
been developed, and benefit from being
WORKERS’ COMP SOLUTIONS
STONERIVER ADDS CAPABILITIES
TO WORKERS’ COMP SOLUTION
StoneRiver, Brookfield, Wis., reports that
Web Quote and Template Underwriting
features are now available as an optional
extension to its PowerSuite Enterprise
workers’ compensation solution.
Web Quote has been designed for
both agents and insureds to use, and
offers a rules-governed, full, straight-through-processing capability from initial
quote through full issuance of workers’
compensation policies.
The StoneRiver solution eliminates
unnecessary information that agents typically must sift through. Instead,
StoneRiver chose to integrate the agent
or insured into the underwriter workflow
and notification processes so underwriters can track progress and respond to
any further requests.
“This approach smoothes the communication between agents and underwriters, ensures process confidentiality
where appropriate, and dramatically
reduces the integration costs and maintenance requirements of other solutions,” noted Rodney Griffin, SVP of
product management for StoneRiver.
Carrier-defined questions allow Web
Quote to properly evaluate the risk
based on the defined profile. Even if a
quotation “breaks out of the underwriting box,” the case is not abandoned. Data
entry is completed and referred to an
underwriter for further processing. The
user interface is designed for an
untrained insured or agent to master
with ease, while offering the ability for
companies to add their own branding.
PowerSuite now offers a set of
beyond-the-firewall capabilities, including certificates of insurance, Web payroll
reporting, Web payments, remote auditor, first report of injury and Web claims
tracker.
able to translate model predictions into
practical business rules and decisions—
integrated into their workflow—that
align with the company’s strategic business goals,” notes Valen’s president, CEO
and founder Dax Craig.
HEMIC’s strategic business goals continue to take priority throughout the
insurer’s predictive modeling initiative.
And although HEMIC outsources its
actuarial functions, the insurer involved
its seven underwriters in the process
from the beginning.
“There was no real pushback,” he
says.
According to Gail McGiffin, global
head of underwriting at Bermuda-based
Accenture, when pushback does occur,
it’s usually due to cultural, historical bias
among underwriters.
“This will change over time as we get
a newer generation of underwriters,” she
says. “To be fair, the technology advancements in the world of commercial insurance have been slow and point-based. So
there is still skepticism, not just about the
model but also the technology enable-ment of the model.”
A SUITE TO EASE WORKERS’
COMP REPORTING AND
DATA MANAGEMENT
To help carriers effectively deal with
growing workers’ comp reporting and
data-management challenges, ISO, Jersey
City, N.J., offers wcPrism—a suite of data
management and compliance solutions.
From a single transactional data feed,
the wcPrism suite can handle all of your
reporting needs for unit statistical, FROI
and SROI, detailed medical, aggregate
financial, policy, detailed claim information, individual case, and proof-of-cover-age reporting.
In addition to the reporting solutions, the wcPrism suite also features the
Executive Analytic Solutions Engine
(EASE), an analytical and report-writing
tool accessed through a standard Web
browser. With EASE, carriers can use
their own compliance data to perform
strategic analysis without the need to
tap IT resources.
CONTROLLING YOUR DESTINY
While Majestic Insurance evaluates its
potential predictive modeling initiatives, the company is taking other proactive measures to improve its underwriting and rating. Working with iPartners
LLC, Alpharetta, Ga., Majestic is able to
identify trends such as sudden changes
in the frequency, duration and outcome
of medical claims in a specific industry
and/or class.
“We wanted the ability to look at
overall exposure in a particular category, and its affect on current loss
ratios,” Greathouse says. “This tool
enables us to look at a 60,000-foot
level, use that view to make informed
decisions and create reports back to
the regulatory bodies.”
Like Greathouse, Sharon Lane, VP,
underwriting, commercial, at Penn
National Insurance, Harrisburg Pa.,
faces a host of state-based regulatory
ups and downs.
“There is not a lot of flexibility to
control your own destiny,” Lane says.
Playing off the success of predictive
models used by underwriters in its personal auto line, the $500 million mutual
company plans to have its workers’ comp
model built, and scorecard in place, by
the end of the year.
This means combining data sets from
the Philadelphia-based Pennsylvania
Compensation Rating Bureau (PCRB),
NCCI, third-party credit, demographic
and supplemental data.
“Because workers’ comp is so
highly regulated, the model will help
us better understand what non-tradi-tional attributes or characteristics can
help guide underwriters in their
process,” Lane says.
HEMIC’s Dove predicts similar
results. “You’d like to be able to predict
the experience of each and every risk,
but the smaller a risk or account gets,
the less predictable it becomes,” he
explains.
Dove offers as an example the
assumption that a good, small risk
should only have a claim every five
to seven years. If an account had a
claim last year, it doesn’t necessarily
make it a bad risk, because they may
not have had a claim previous to
that, he points out.
“You have to be able to lump them
into a larger group of like accounts, then
break them out in a more sophisticated
way,” Dove says. “Predictive models
allow you to do that.” INN
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