Analytics provider Fico has launched a management system aimed at improving the return on investment for predictive models used in insurance.
According to the firm, Fico Model Central for Insurance will reduce model deployment times by as much as 50%, while providing the first indications that a model's performance may be damaging profitability.
The product aims to provide a complete environment for managing predictive models in a reliable, automated and integrated way, by presenting a management dashboard of overall model health and providing an "early warning system" that alerts personnel to performance degradation so they can take action before business decisions are affected.
According to Fico, insurers increasingly use predictive analytics models in mission-critical decisions, but some model management processes hinder performance and many insurers have inconsistent or inefficient methods for tracking model performance and updating models.
In a recent Fico survey, 64% of insurers said they lacked the ability to rapidly deploy or update models to maximise business impact. One-third of insurers surveyed said that implementing a new model takes four to six months, and 51% said it takes six months or longer.
"From mismatching product offers to getting the price wrong to missing fraudulent claims, weak analytic models hurt profitability," said Fico vice president Russ Schreiber.
"Yet in our recent survey, just 18% of insurers said they had a well-organised system for managing model performance. New insurance regulations such as Solvency II in Europe and similar proposals in the US mandate that insurers do better than this."
In addition to its other functions, Fico's management system lays a foundation for meeting Solvency II's capital adequacy and risk management requirements.
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