Valen’s UnderRight^® enables insurers to increase the accuracy of underwriting decisions and pricing tier placement. Using UnderRight, insurers avoid adverse selection, improve competitive position, shorten underwriting cycle time and reduce loss ratio by at least 4 points.

Valen’s UnderRight enables insurers to increase profitability by making accurate and consistent underwriting decisions and by assigning risks to the correct pricing tier. Valen’s data experts gather data from our customers, cleanse and organize the data, and combine that data with our ValenNetworks^™ database of historical information. In addition, we use firmographic, demographic, econometric and other classes of information contained in our XData^® database to enhance the quality of our predictive models. Our modelers use the resulting data to build predictive models that produce underwriting scores that can be used for tier placement, schedule rating or to reduce underwriter touch. Our models are deployed using a Software-as-a-Service approach that provides ready access to the results of sophisticated predictive analytics. Our customers typically see a minimum of a 4% improvement in loss ratio, a reduction in underwriting cycle time and greater consistency in underwriting decisions.

The Business Challenges:

Consistency: Underwriting is a time-consuming activity that requires manual review of applications for insurance as well as review of inforce contracts. Underwriters tend to make inconsistent decisions both within the same underwriter as well as between underwriters. Inconsistency leads to a heterogenous book of business that can be very difficult to price with any degree of accuracy.

Accuracy: Underwriters generally have the ability to consider a few key risk characteristics and hundreds of other characteristics are ignored.  The more an underwriter understands about a particular risk, the better able he or she is to make a proper decision  - and the likelihood of profitability increases.

Speed/Ease of Doing Business: In a competitive insurance market, decision speed is critical.  If an underwriter takes too much time to render a decision or to issue a price quote, it is probable that the agent will take his business to a competitor.

Valen's Solution:

Valen UnderRight is a deployed predictive model that presents the user with an underwriting score and/or a tier placement recommendation.  It is up to the underwriter to select the most appropriate tier based on UnderRight’s recommendation.  It is possible to use the UnderRight score to bypass the underwriter completely or to connect with a workflow engine to assign more challenging cases to more experienced underwriters.  The solution includes the gathering and preparation of data, model building using the client’s historical data combined with the ValenNetworks data and firmographic data and the java client software that resides on the insurer’s users’ desktops.

Standardized Implementation:

Implementation is conducted in five major phases: project definition, data gathering, modeling, model deployment and model monitoring.  Due to the notoriously problematic nature of insurance company data, the data gathering phase may take in excess of six months.  Carriers that have already built data warehouses and have very clean data may see this phase shortened.  The modeling phase is highly dependent on the amount of historical data available.  More data will generally result in improved models and a more rapid model building phase.  The model deployment phase will depend on the amount of customization required by the carrier.  Total implementation should require less than 12 months.