Predictive Modeling Integration Is Coming

March 1, 2013 Insurance Topics 2

Screen Shot 2013-03-01 at 10.39.52 AMThe future of predictive modeling will not be limited to workers’ compensation.

My recently-released article, “The Next Great Thing in Predictive Modeling,” explains how predictive models will be integrated across insurance lines and traditionally siloed insurance. To describe this, I coined the phrase, “Integrative Predictive Modeling.”

To the employer, this means that the day will come when you can buy coverage for all insurances and enjoy benefits beyond the traditional multi-line discount. Through “enterprise predictive modeling,” employers will be offered integrated packages of coverage for workers’ compensation, commercial auto, general liability and even professional liability.

While at the earliest stages, insurers will be more responsive to reflecting premium based on current claims experience and not just past experience. Therefore, employers who improve their workers’ compensation and other programs will not have to wait the two-to-three year lag time to enjoy better premiums.

Some actuaries believe it will make the traditional experience modification factor unnecessary. As I covered in a different article, Beecher Carlson, the insurance brokerage firm, is offering a total cost of risk tool that more quickly responds to claims experience in the underwriting process. (To see the article, click here.


To the employer, this means that the day will come
when you can buy coverage for all insurances and enjoy benefits
 beyond the traditional multi-line discount.

Call me a visionary or deluded dreamer, but I believe predictive modeling will be a key connector needed to combine workers’ compensation coverage with health care, non-occupational disability coverages and other programs related to a workforce’s total health and productivity. This is also known as absence management and benefit integration benefits. (See my blog, Integrated Predictive Modeling How Long Must We Wait?)

I am psyched about the potential that will come from integrated predictive modeling and I am honored that the American Academy of Actuaries publishing my piece in its Contingencies magazine.

Finally, if you are interested on who should be doing predictive modeling, actuaries or statisticians, you are welcome to read my other recently-released article, “Professional Jealousy,” which is the lead article for Contingencies’ supplement, Actuarial Job Seeker.)

(This is part VI of my series on What Employers Should Know About Workers’ Compensation Predictive Modeling. I am quite ready to write about something else! 🙂)

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To see my compendium of predictive modeling articles and posts, please click the “predictive modeling” section at the bottom of this blog.