Denver, CO – Valen Analytics®, an Insurity company, recently announced the latest in its suite of predictive models with the launch of the Unavailable Loss History Model. The first-to-market model enables accurate scoring of insurance policies that have no information on loss history.
Prior loss experience has traditionally been one of the key parameters in evaluating the quality of the risk when an insurer is quoting a policy. Yet, insurers can score up to 70% of small premium policies without any loss information using models that aren’t built for these types of policies.
Valen’s model, now in its fourth generation, delivers highly accurate predictions for insurance policies without any loss history information by employing a combination of third-party and synthetic variables derived from the Valen Data Consortium. The model is built and tested against a large and granular data set of approximately 650,000 policies presenting $7.6B in premium. By leveraging this diverse data set with 10 years of loss experience, the new model is finely tuned to answer the question “How do similar policies perform?” as an indicator of risk quality.
“With this latest solution, we are entering the next stage of industry innovation in predictive analytics,” said Kirstin Marr, President of Valen Analytics. “Being able to deliver valuable insights despite the absence of a key piece of information like loss history is a true testament to the power of partnering around data. As insurers pursue the small commercial market, the ability to accurately assess risk, while collecting less information on the application is crucial to gaining market share. We are confident that we will continue to develop such impactful solutions as our consortium scales.”
According to Valen’s recent study, synthetic variables developed with Valen’s consortium data demonstrated up to 13 times more predictive power than variables built with policy-only data. Synthetic variables are built from computations of more than one variable and leverage the breadth and depth of experience in the consortium. The Valen Data Consortium, which is comprised of data from dozens of third-party data sources and more than 60 insurers, has significantly grown in the past year, with 57% growth in Workers’ Compensation and 266% in Commercial Auto. This momentum allows Valen to better serve insurers with more accurate predictive insights needed for real-time decision making.