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 notbutchered. More doing more with less.Resource maximization more critical than ever.
• Increased (if possible) emphasis on removing costs, inefficiencies from processes, improvingdeliverables (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/employeeexperience – 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 IntegrationGail Mc Giffin
Partner, Global Underwriting Solutions Lead
© 2009 Accenture. All rights reserved. 9
Economic and competitive trends are reshaping the Insurance industryOver 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 Differentiation– Undifferentiated products/services– Limited cross-selling– Large-grained industry and customer
segmentation
• Talent Erosion– Exodus of UW/Claims technical
experience – Reduced recruiting/training spend– Deficient sales skills at customer
interaction points
• Inconsistent, Manual Processes– Limited technology enablers– Lack of data and technology
integration
• Lack of Sophisticated, Granular Insight– Immature BI Capabilities– Limited Use of 3rd Party Data– Limited Use of Predictive Modeling
• Changing Agent/Broker Landscape– Return of Global Broker focus
on MM segment– Emergence of new National
Brokers from M&A– Disappearance of Local
Independent Agencies– Repositioning of Captive
channel
• Emerging Environmental Issues & Exposures– Expanding definition of terrorism– Virtual globalization of business
exposures– Climate change-related
catastrophes
• Increasing Market Pressures– Economic crisis– Increasing federal oversight– Cross-border M&A activity
Emerging Landscape
Historical Landscape
> Eco> Economic & Competitive Trenomic & Competitive Trends <nds <
© 2009 Accenture. All rights reserved. 10
Insurers that maintain insight and business rules in functional silos experience sub-optimal decision making and therefore sub-optimal results.
Sales & Distribution
Underwriting & Pricing
Policy Administration ClaimsMarket Research &
Product Development
Target customer segment for new product = Boutique
StoresTarget profile = sales < $5m, suburban or rural territories, Tier I and II
agentsProducts = BOP, Auto, WC,
UmbrellaSpecial coverage forms,
proprietary rating, predictive pricing model
Sales force in certain territories discovers that retail store business is
controlled by specific Tier III agents writing with smaller, local insurers
Given new product launch in the market and
aggressive sales goals, local sales managers
decide to pursue these Tier III agents for the business.
New business application #1 --- urban jewelry store
submitted and quoted. Quote rejected as not
competitiveNew business application #2 – suburban pet store submitted and quoted
successfully (policy written) for Tier I agent.
UW rules dictate exclusion for animal mortality.
Thirty days after policy is issued, endorsement
request submitted to call center to add coverage for
animals.CSR processes
immediately based on tier of agent (Tier I) and target
nature of account.
Claim submitted for loss of animal inventory due to water contamination.
Adjuster pays claim and closes out file.
Claim department knows this type of claim is typical with pet stores rather than
mortality claims.
Boutique stores results are marginal due to lack of penetrationwith Tier I and II agent expectations and adverse selection in urban territories.
Performance Management
© 2009 Accenture. All rights reserved. 11
This decision leakage can proliferate across the value chain thereby compounding the resulting impact.
Sales & Distribution
Underwriting & Pricing
Policy Administration ClaimsMarket Research &
Product Development
Target customer segment for new product = Boutique
StoresTarget profile = sales < $5m, suburban or rural territories, Tier I and II
agentsProducts = BOP, Auto, WC,
UmbrellaSpecial coverage forms,
proprietary rating, predictive pricing model
Sales force in certain territories discovers that retail store business is
controlled by specific Tier III agents writing with smaller, local insurers
Given new product launch in the market and
aggressive sales goals, local sales managers
decide to pursue these Tier III agents for the business.
New business application #1 --- urban jewelry store
submitted and quoted. Quote rejected as not
competitiveNew business application #2 – suburban pet store submitted and quoted
successfully (policy written) for Tier I agent.
UW rules dictate exclusion for animal mortality.
Thirty days after policy is issued, endorsement
request submitted to call center to add coverage for
animals.CSR processes
immediately based on tier of agent (Tier I) and target
nature of account.
Claim submitted for loss of animal inventory due to water contamination.
Adjuster pays claim and closes out file.
Claim department knows this type of claim is typical with pet stores rather than
mortality claims.
Lack of integrated decisions and insight results in unfavorable/unintended results
•Inadequate competitor &market analysis
•Gap in product vs. sellingrules
•Misalignment in salesexpectations and UW
appetite & pricing rules
•Service segmentationnot aligned with
risk segmentation•Lack of insight into UW
Intent/rules
•No insight into UW rules•No feedback loop
into PD/UW
•Lack of insight from priorclaims experience
•Lack of sales/agent insightIn market analysis
© 2009 Accenture. All rights reserved. 12
Shared insight and integrated business rules enable more interconnected decisionsacross the enterprise.
Sales & Distribution
Underwriting & Pricing
Policy Administration ClaimsMarket Research &
Product Development
Refined product targets for urban vs. suburban/rural
territories
Optimized pricing models by type of store by territory
Focused sales aligned to UW appetite, product rules and competitive pricing by customer type by territory
High hit ratios for submitted new business
Pricing/coverage can be elasticized for best risks
Policy servicing rules are synchronized with sales
and UW strategies
Tighter linkage between UW rules and
form/issuance rules
Predictability in loss types based on product/customer
profiles
Loss coding better aligned to UW/policy coding
Target mix achieved for desirable SICs, territories, agents and size.Compelling new product offering penetrates market with higher growth rate.
Performance Management
© 2009 Accenture. All rights reserved. 13
High Performance Decisioning Benefits
Better synchronization of rules and analytics • Product eligibility/targeting• UW appetite/pricing• Workflow, work assignment• Sales approach• Policy forms, billing options by product/agent• Claim processing
• Improved loss ratio• Focused and targeted growth (better hit
and retention ratios)• More optimized book mix• Easier to do business with• Better customer experience• Fewer errors, less rework• More granular insights to refine products,
services and processing as a competitive edge
•More integrated insights• Claims experience Product development• Sales/marketing PD/UW• PD/UW Policy processing
Integrated decisioning can dramatically reduce decision leakage and provide a competitive advantage in the marketplace
© 2009 Accenture. All rights reserved. 14
Accenture’s Integrated Decision Solution for Product Management
Product Configuration/Testing/DeploymentAnalytics
Testing Interfaces
ImpactAnalysis
Production(Transaction
Systems)
Data Services
Policy
Claims
DW
3rd Party
Product Definition
Rates
UW Rules(incl Predictive
Models)
Form Rules
RatingEngine
Rules Engine
Forms Engine
Production Rates
Production Rules
ProductionForms
PremiumDisplacement
Rules/PricingImpact
FormImpact
ETLCleansingMatchingProfilingQualityIntegrationAugmentation
Development Applications
Forms Application
Rules Application
Rating Application
Performance Data
Sample Data Sets
FormsSelected
Mods / Factors
Rules Fired
Customers
Agencies
Geographies
Competitors
An enterprise rules and analytics platform is required to support integrated decision solutions.
© 2009 Accenture. All rights reserved. 15
A Rule Taxonomy helps to govern and direct decision behavior across the enterprise
Product Configuration
Product DefinitionData Validation
Display Formatting
Data Derivation
External InformationOrdering
Information NeedsIdentification
Data Reconciliation
EligibilityAcceptance
Referrals
Pricing Price Level Selection
Premium CalculationRate Order
Rate Step
WorkflowProcess Management
Task Management
Form Definition
- Sample Rule Category to Sub-Category Mapping –
Illustrative
© 2009 Accenture. All rights reserved. 16
1-2 Months 4-8 Months 4-6 Months 1-2 Months•Determine scope of extraction/ management effort – e.g. 1 state, 1 line of business, type of rules
•Secure resources
•Conduct initial interview of functional SMEs to compile list of rule sources (e.g. rate plans, guidelines, individuals etc)
• Conduct initial interview of technical resources to identify existing rule locations in legacy environment
• Confirm location of Central Rule Repository (database) and determine if build activities are necessary
• Catalog Rules – establish rule types/categories via functional walk-thrus of each transaction type and technical discussions
•Document existing rule framework by mapping rule types/categories to legacy environment
•Perform manual review of documentation (e.g., manuals)
•Interview functional resources to understand variations from documented rules (e.g., actuaries and field operations personnel)
•Interview systems resources to make code dive decisions
•Perform automated and manual review (“code dive”) of rules within systems
•Create rule decision trees
•Build Roadmap to prioritize when certain rule types/categories should be targeted for extraction activities
•Document extracted rules in centralized repository
•Design, configure, and build central rule repository (if required)
•Design and build business rules workbench (e.g. rules maintenance facility)
•Perform Detailed Rule Review with SMEs to ensure extraction accuracy
•Consolidate/rationalize inaccurate and duplicated rules
•Establish rule test environments infrastructure
•Develop and confirm testing process flow and signoff criteria
•Perform rule testing – unit, system, client acceptance
•Revise extracted rules to ensure match to target system
•Obtain sign-off on results of validation and operational rule testing activities
•Complete build-out of the business rules workbench
•Develop training to support use of the business rules workbench
•Develop and confirm rules maintenance processes
•Install analysis and feedback loop among rule maintenance, underwriting, product development and other involved capabilities
•Determine metrics that will be collected and develop capabilities to support that reporting
Prepare Extract Validate OperateExisting Rule Framework Analysis
New Rule Framework Creation
RuleExtraction
Validation and Translation
Operational Rule Testing
On-Going Maintenance
InitialPreparation
A Rules Extraction Process helps ensure both programmatic and human decision-making elements are codified.
© 2009 Accenture. All rights reserved. 17
Rules Architect•Provides a program-wide view of rules activities and application architecture decisions•Oversees maintenance of the centralized rules repository•Creates and maintains a decision tree to facilitate consistent deployment decisions•Tracks extraction activity across the project to be sure that rules are made available to facilitate design activities• Provides point expertise for all related rules activities including identification, extraction, deployment and testing
Rules Analyst•Reviews the materials available to identify and extract the existing rules (through manuals, interviews, etc.)•Documents rule categorizations, inventories, and application mappings•Develops future business rule capability requirements•Documents the rules in the Rules Repository
Enterprise Product Rule Manager•Overall responsibility for maintaining enterprise business rules•Liaison to actuarial, underwriting, product, and systems organizations•Provides guidance and strategy to the stakeholders around rule definition•Supervises line of business rule librarians•Responsible for maintaining integrity of the rules process, identifying improvements where necessary
Rule Librarian Specialists for Each Product/Line/State• Overall responsibility for maintaining line of business and/or business unit (i.e. underwriting) specific business rules•Works with actuarial, underwriting, product and systems organizations to ensure rules are defined and implemented correctly •Has authority to make decisions about product rules and implementation within the new environment•Provides guidance to line of business/region on product strategy•Understands impact of rule changes on systems•Maintains and enters rules
Centralized Rules Repository/Business Rule Workbench Developer•Assists development of centralized repository/business rules workbench•Develops front and backend components related to rule management infrastructure
Technical SMEs for Each System•Understands the implementation of all products within a given system•Able to read the code and understand the system architecture
Functional SMEs for Each Product/Line/State•Understands how products/rules are implemented in current systems
Key Roles and Responsibilities should be established to support this higher level set of analytics and decision capabilities
Illustrative
© 2009 Accenture. All rights reserved. 18
Implementation Approach
DecisioningTechnology
Management InformationRule
ResultsReporting
BusinessSimulation
Data WarehouseIntegration
Technical Architecture
Testing
Rule/Rate/ ProductManagement Tools
Rule Testing TrackSoftware Testing Track
Rule Unit Testing
Automated Regression TestingSystem Testing Best Practices
Ruleset Testing
Test Data ManagementRules System Test
VersioningApproach
RuleConstruct
Type
Meta-DataApproach
RuleFirings
Persistence
OrganizationApproach
Security
Performance
Rule ServicePartitioning
Rule RepositoryArchitecture
ReferenceData
Approach
Business Outcome Testing
Project ManagementObject Model
ChangeDependencies
Rule ManagementSoftware
Workstream
Rule ExecutionSoftware
Workstream
Rule DevelopmentWorkstream
Testing Facility
Migration Facility
Reporting Facility
RuleDeployment
QA Ruleset
Portal
Authoring FacilitiesVersioning
Applicability
Query
Ambiguity Checking
Copy and Paste
Organization
Rule ChangeImpact Analysis
ResearchRules
EnterpriseRepository
ReferenceData
Management
Harvesting
MethodologyProduct & ProcessSMEs
Librarian
Type-SpecificRepositories
An Enterprise Rules Architecture supports the lifecycle of analysis, rule configuration, rule testing, rule deployment and rule performance measurement to industrialize decision management solutions.
© 2009 Accenture. All rights reserved. 19
This architecture should be supported by an enterprise AnalyticsFramework…
Insurance Value Chain Analytics Framework
Product Development
Marketing & Distribution
Pricing & Underwriting
Policy Processing Claims Performance
Management
Enhanced Enterprise and Core Capability Decision Making
• Gain insights for creating more tailored products
• Improve ability to deploy new products effectively (filing strategies, training, marketing)
• Enhance primary and secondary research focus
• Leverage product performance metrics to improve business rules and operational efficiency
• Identify potential sales more precisely by analyzing customer purchasing patterns
• Enhance agency recruiting capabilities
• Optimize distribution compensation models
• Improve prediction of product preferences and customer retention
• Speed risk selection and quoting with better alignment between risk quality and pricing (reduced leakage)
• Provide timely insight into price tiering models (eg., predictive models) to adjust models for more targeted marketing
• Identify non-core underwriting operational activities that are candidates for automation, elimination or delegation
• Improve utilization of underwriting services (premium audit, loss control)
• Provide more accurate, timely and detailed understanding of exposure accumulation
• Increase ability to enhance servicing for the most valuable customers and distributors
• Lower costs of processing with enhanced insight into performance of operational staffing models
• Gain insight into process bottlenecks and detailed transactions to identify improvements in policy automation
• Improve timeliness and accuracy of fraud detection
• Enhance resource allocation and prioritization with better insight and predictability into claim complexity and settlement potential
• Improve subrogation predictions
• Enhance reserving practices
• Gain operational insight to increase levels of automation for simpler claims
• Improve consistency in metric management for the organization
• Improve alignment between internal and external data quality and reporting standards
• Achieve greater granularity and timeliness in reporting for improved insight and regulatory compliance
• Increase user sophistication in performance analytics through improved data management and analytic technologies
© 2009 Accenture. All rights reserved. 20
…including detailed KPIs for targeted areas of decision analysis.
Marketing
• Market Penetration Analysis
• Strategic Demographic Analysis
• Competitor Analysis
• Agency/ Distribution Analysis and Performance Measurement
• Campaign Effectiveness (Affinity, Advertising, Lead Dissemination, etc.)
• Account Rounding Analysis
• Customer Value Analysis
Sales
• Agent Performance/ Profitability Analysis
• NB & Quote Flow• Hit and Yield Analysis
• Cancellation Analysis
• Retention Analysis• in-Force Strategy • Agent/Distribution Performance Analysis
• Channel/Access Method Analysis
• Agency Management Analysis
• Sales Tool Efficiency• Acquisition Cost Analysis
• Compensation Analysis
• Relationship Referral Analysis
• New Business Sourcing Analysis
• Cross Sell / Up Sell Analysis
• Lead Management
Product
Product Research• Market Territory Analysis
• Market Segment Analysis
• Competitor Analysis• Distributor AnalysisProduct Design/ Performance
• Historical Product Analysis
• Rate Making Analysis
• Pricing Analysis • UW Rule Analysis• Loss Experience Analysis
• Contract/ Forms AnalysisProduct Launch
• ROI Analysis• Product Launch Analysis
• Impact/ Disruption Analysis
• What/If Analysis• Regulatory/ Trend Analysis
• DOI Relationship Analysis
• Pricing Performance including Tool Usage
• Predictive Model inputs/outputs/final
• Predictive Model deviations from Baseline
• Predictive Model and UW Rule Integrated Analysis
• Rate Adequacy Analysis
• Marketplace Analysis
• Profitability Analysis
• Loss Ratio Analysis• Loss Development and Trending
• Rate Development and Trending
• Residual Market Loads (WC)
• Involuntary Book Analysis
• Off-Balance Analysis
• Reserve Analysis• Expense Analysis
Underwriting
• UW Productivity• UW Expense Analysis
• SLA Mgmt• Appetite Analysis• Segmentation Analysis
• Book Mix Analysis• Hit and Yield Analysis
• Referral Rates• Authority Analysis• Rule Analysis• Price/Credit Analysis• Agent Performance by Account/Book
• UW Service Utilization
• Market Comparison Analysis
• Competitor Analysis• Quality/Audit Analysis
• Exposure Management
• CAT Management• Loss Experience Analysis
• Reinsurance Analysis (Treaty, Fac)
Servicing
• Service Channel Analysis & Optimization
• Service Channel Segmentation
• Knowledge Management
• Content Management
• Workflow Analysis• SLA Mgmt• Contact Mgmt • Turnaround Times• Cycle Times• Straight-through processing volume
• Escalation Analysis• Reassignment Analysis
• Customer Complaint Analysis
• Policy Error Analysis
• Span of Control Analysis
• Self-service Inquiry Analysis
Corporate Performance
• Planning/ Budgeting
• Growth Analysis• Book Mix and Portfolio Analysis
• Profitability Analysis
• Marketplace Analysis
• Competitor Analysis
• M&A Analysis • Performance Management
• Resource Attrition• Investment Analysis
• Expense Analysis • ISO and Bureau Reporting
• DOI/Statutory Reporting
• Taxes, Boards & Bureaus Analysis
• Voluntary /Involuntary Market Analysis
Pricing/ Actuarial
Claims
• Claims Assignment and Routing
• Fraud Detection• Formula Based Reserving
• Reserve Analysis• Claims Handling Effectiveness
• Claims Processing Efficiency
• Subrogation Analysis
© 2009 Accenture. All rights reserved. 21© 2009 Accenture. All rights reserved. 21© 2009 Accenture. All rights reserved. 21
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
Data Access Services
Business Process andWork Management
Distribution and Access Methods
Role Based UI
Orchestration and User Tasks
Enterprise Data Sources
AMS Upload
Back Office
Downstream and Reporting
Com
mo n
Arc h
itect
ure
Tool
san
dSe
rvic
e s
Third Party Data SourcesProduct /
Policy / UW Data Sources
Sales and Marketing
Data Sources
Billing Business Intelligence Claims
Email Fax BranchOffice
ProcessOfficeAgent Office
Decision Management
Decision Analytics and Rules Management
Claim Segmentation
Rules
Rule Performance
Analysis
User Experience
Rules
Info Ordering
Rules
Workflow Rules
Billing & Cancellation
Rules
Business Services and Tools
Product Configuration / Identification
Policy Transaction Processing
Underwriting Tools and Services
Sales and Marketing Tools and Services
Product Rules
Rating & Issuance
Rules
UW & Pricing Rules
Sales Rules
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.
Connected DecisionsEnhanced Profitability & Sustainable Competitive Advantage
Scott HorwitzSenior Director, InsuranceFICO
Lamont BoydDirector, Global Scoring SolutionsFICO
July 9, 2009
© 2009 Fair Isaac Corporation. Confidential.© 2009 Fair Isaac Corporation. Confidential.
FICO is the leader in Decision Management —transforming business by making every decision count
Automatecomplex decisionsin real time
» Increase consistency
» Reduce manual reviews
Improvedecision qualitywith analytics
» Reduce fraud and claims losses
» Optimize underwriting and reserving
Connectdecisions across theenterprise
» Manage across product lines and business silos
» Execute coordinated 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 takedecisive action to improve results
Connected Decision Principles Operational Benefits Delivered» Taking a policyholder lifecycle view
rather than a functional view
» Recognizing historical information, previous actions, and current policies at one lifecycle decision can influence decisions at another point
» Unlocking efficiency gains and competitive advantage that lie between decisions
» Vision: Improved business visibility & reporting across the policyholder lifecycle
» Segmentation: Finer categorization of policyholders resulting in better matches between actions, needs and outcomes
» Lifecycle Coordination: Individual and incremental value-add through connections that span different 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.
Product Management Underwriting Policy
AdministrationClaims /
Reserving Fraud
Core Insurance OperationsMarketing
Age
nt P
orta
l
AgentCustomer
Disconnected Decision - Example
Marketing offer for Kevin Smith directing him to visit his agent to get a free rider on homeowner policy
Kevin Smith visits his agent to get the offer
The Independent Agent is not aware of the promotion and applies for the coverage for Kevin
Disconnected Decision:Kevin is denied the offer as information regarding Kevin’s pre-qualification was not fully integrated into underwriting system
» 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
Potential Cost of Disconnected Decision
Connecting decisions across the customer lifecycle unlocks the efficiency gains and competitive advantage that lies between decisions
Connecting decisions across the customer lifecycle unlocks the efficiency gains and competitive advantage that lies between decisions
© 2009 Fair Isaac Corporation. Confidential.
Product Management
Underwriting Claims / Reserving
Fraud
Core Insurance Operations
Marketing
AgentCustomer
Connected “New Business” Decision
Agent or Applicant Requests New Policy
Application Data Validation
1
Credit Based Insurance Scoring
Analytics 2
Marketing Offer
Analytics
3
Claims History4
Fraud Assessment
Analytics
5
Composite Risk Assessment
Analytics6
Offer Configuration
8Underwriting
Approval7DECISION SERVICES
AnalyticServices
RulesServices
DataServices
Policy Administration
© 2009 Fair Isaac Corporation. Confidential.
Connected “New Business” Decision Decision Services Unlock the Value
Decision Services Descriptions* Value PropositionValidates the accuracy and completeness of application data using business rules, internal and 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 or corrected data.
-Reduces errors in application
-Reduces time spent on acquisition
Pulls a FICO CBIS score from applicable bureau to perform early segmentation of applicant’s risk. If 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 different path, based on state regulatory requirements.
- Better risk segmentation
- Expense reduction in determining additional data requirements for underwriting decision
Obtains data regarding any current offers the applicant has received or is qualified for and augments new business workflow with appropriate information.
- Improved customer service
- Relevant offers presented to prospects
Pulls any available internal claim/loss history or any required external claim history data as required based on data available from previous steps. Allows for internal historical data to be utilized during the process.
-Efficient use of internal/external information to enhance the risk profile
Utilizes possible prior internal claim history and application information to determine if the applicant has any positive identification of recent proven of suspected fraud. If applicant has past suspected fraud, application is routed by business rules to special resources to determine appropriate action.
-Early identification of suspicious risks prior to claim submissions
Based on CBIS score, application data and additional external data (e.g. MVR, CLUE, etc.) creates overall applicant risk score for underwriting decision and price tiering.
- Increased pricing precision based 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 business rules. The underwriting decision service can optimize pricing to suit strategic goals and constraints using optimization models as applicable.
-Provides the ability to set competitive and optimized prices for desired customer profiles
Utilizes marketing, CBIS, underwriting and claims analytics to determine any complimentary products or offerings that should be packaged with the requested coverage to cross-sell, up-sell or enhance conversion rate for high value customers.
-Increased revenue/profit potential through identification of additional opportunities
1
2
3
4
5
6
7
8
* Decision Service Descriptions correlate to numbered actions on previous slide
© 2009 Fair Isaac Corporation. Confidential.
Pres
enta
tion
Tier
B
usin
ess
Serv
ices
Tie
r
Product Management Underwriting Policy
AdministrationClaims /
Reserving Fraud
Core Insurance Operations
Marketing
Call CenterAgent Portal
Agent Customer
Web Portal
Decision Management ArchitectureEnabling Common Components
Key Enabling Architectural Components
Data Access & Management
Rules Management
Analytics & Optimization
Model and Rules
RepositoryCase
Management Reporting
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 Management Solutions
Key Benefits to the New Business Process
FICO Blaze Advisor Business Rules
Management
»Automates the underwriting process by incorporating a carrier’s underwriting guidelines within the rules repository
» 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
(Industry-Standard Scores and Custom models)
» Improves the precision of existing rating methodologies; assistsexisting 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 and make predictions based on those patterns to acquire and retain customers
FICO Decision Optimization
» Improves a carrier’s ability to develop business strategies based on an optimized view of business objectives and associated constraints
» In some cases allows carriers to incorporate strategies real-time
© 2009 Fair Isaac Corporation. Confidential.© 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.”
Marketing Policy Underwriting Loss Ratio Fraud Solution
Development
Profit per account through cross marketing and
selling
Straight-thru processing
Decrease in loss ratio
Decrease in fraud losses through
early identification
Decrease in systems
development time
30%30% 99%99% 50%50%
Sample Client Results within Insurance
8 %8 % 35%35%
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.
THANK YOU
July 9, 2009
Scott [email protected]
Lamont [email protected]
Q&Aplease 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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