Insurance

AI Adoption and the Insurance Industry

Today’s insurance companies are embracing AI to improve profitability, become more efficient and, ultimately, create a better customer experience.

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AI and Insurance

DataRobot provides insurers with unrivaled power to optimize their market selection, underwriting, pricing, and claims management. Using DataRobot, insurers can deploy analytics in a fraction of the time it usually takes, providing for vastly greater speed to market, more accurate pricing, reduced loss ratios, and higher conversion rates.

Strategic Risk Selection

Strategic Risk Selection

  • Identify profitable prospects
  • Accelerate conversion rates
  • Improve quote accuracy
  • Increase renewals and reduce “churn”
  • Inculcate “best practices”
Precision Pricing and Reserving

Precision Pricing and Reserving

  • Access leading-edge, machine learning algorithms
  • Deploy pricing models without reprogramming
  • Increase accuracy of loss costs
  • Develop rates five to fifteen times faster
  • Develop losses individually for each claim
  • Build reserves accurately from the “bottom up”
Optimized Claims Management

Optimized Claims Management

  • Identify claims for straight-through or manual processing
  • Flag potentially fraudulent claims
  • Identify subrogation opportunities
  • Predict claim severities and large loss potentials
  • Improve adjuster performance with outcome-based assignments

Insurance Case Studies

“Large, medium or small — there is no doubt about the impact of predictive modeling in any insurance company. The question that everyone is asking: how can we bring a sustainable, cost-effective, and inclusive predictive modeling strategy within the organization? Automated machine learning is the answer to that question.” — Neal Silbert, General Manager DataRobot Insurance
Check out all Insurance use cases

Dynamic Pricing Precision

Using DataRobot for pricing, a large UK motor insurance carrier substituted a gradient boosting model for its generalized linear model in one line of business. As a result, the carrier reduced its loss ratio, improved its combined ratio, increased its retention ratio, and reduced its acquisition costs — in all, adding value worth up to $8 million. DataRobot’s ability to execute linear and nonlinear algorithms simultaneously helps deliver precise risk-specific pricing that reduces vulnerability to adverse selection.

Reduced Churn

Insurers lose money when good customers don’t renew, as lapsed policies need to be replaced with more costly new business. Using DataRobot, a large European insurer incorporated the risk of “churn” into its renewal pricing, leading to reductions in cancellations and non-renewals, an improved loss ratio, and a 24% reduction in variable costs. In all, the company estimates the value at €12.5 million a year.

Mitigating Litigation Risk

A large commercial U.S. property and casualty carrier used DataRobot to develop a model for predicting the likelihood that a workers’ compensation claim would lead to litigation. Claims scoring high for the probability of litigation are referred to senior claims staff for early and attractive settlement offers. The company estimates that it has avoided 10% of the litigation it would have experienced without the model, leading to a 25% decrease in the cost of at-risk claims and an estimated value to the company of more than $5 million per year.

Fraud Detection

Modern machine learning is far more effective than static rules in detecting ever-evolving methods of fraud. In one case, a large European property and casualty insurer implemented overnight batch runs of auto claims against a model developed by using DataRobot. Claims scoring high for probability of fraud are now assigned to a specialized claims fraud investigation team. The company estimates that it has increased the accuracy of its fraud detection by 30%, yielding more than $10 million in value.

Capitalizing on Subrogation

Subrogation opportunities are like finding money, but only if you can identify them and act quickly. A continental European motor insurer worked with DataRobot to identify claims with a high probability for subrogation recovery. Claims handlers now receive automated lists of claims with subrogation. The company has doubled its subrogation rate from 1.4% to 2.8% of claims and expects annual recoveries of €4-8 million a year.

DataRobot Helps Insurers With:

Clear communication

DataRobot’s platform is designed for users to understand and explain predictions to customers, executives, and regulators. Factors with predictive value are clearly identified and explained, and “prediction explanation” codes tell users why an applicant received a certain price, score, or recommendation.

Easy platform integration

DataRobot provides the capability for straight-through deployment of analytical models, avoiding the need to reprogram. Users have several options for accessing our platform:

- Applications can interact with DataRobot models directly through the REST API;
- DataRobot can export models in Java .jar
- DataRobot can generate Java or Python scoring source code
- DataRobot can generate a scoring application with its own web-based user interface.

“Democratized” modeling

Companies using DataRobot often find they can start developing real models by the second day of training. That’s because DataRobot allows “citizen data scientists”--business analysts, actuaries, IT staff, product managers, and underwriting and claims specialists--to help create predictive models without needing formal credentials in data science.

As a result, DataRobot liberates insurers from excessive reliance on overburdened data scientists who can usually respond to only a small fraction of the opportunities and challenges created by predictive analytics.

Managing the lifecycle

The accuracy of models can “drift” with new underwriting and loss experience. DataRobot helps maintain model accuracy by automatically notifying users how far current results diverge from modeled predictions and what factors may be causing the divergence.

This capability is critical for alerting users to growing drift before its impact shows up in financial statements and you’ve lost competitive edge--or your job.

Adaptable to “real world” data

DataRobot works with data “as is,” with all the gaps and limitations commonly found in it. No extensive data preparation is required for you to start creating AI models. DataRobot’s output will help you prioritize your efforts to expand and refine your data.

 
Jason Cabral
Jason Cabral
Chief Actuary, Markerstudy

What Our Customers Are Saying

  • "Through DataRobot, I'd reckon we've gained at least one point savings on the loss ratio, so you're looking at about $7 million pound savings."

    Jason Cabral
    Jason Cabral

    Chief Actuary, Markerstudy

  • "DataRobot gives you all the tools you need. It will democratize machine learning across the whole business."

    Pardeep Bassi
    Pardeep Bassi

    Head of Data Science, LV=

  • "We want to be truly customer-focused with all our 16 million customers, and to do that we need to be able to predict the potential behavior of each of them to put the right offer in front of them at the right time. There's no way we can be as customer-focused as we would like without the help of machine learning."

    Paul Davies
    Paul Davies

    Head of Data Science, Domestic & General

DataRobot in the News

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Insurance Business Magazine: Breaking through the issues preventing AI adoption in insurance

Feb 22, 2019
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Carrier Management: Underwriting in 2018: InsurTechs Eye Analytics, Automation

Mar 22, 2018
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mit technology review

MIT Technology Review: You Could Become an AI Master Before You Know It. Here’s How.

Oct 17, 2017
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