A new study released by Colorado-based Valen Analytics, an Insurity company and provider of proprietary data, analytics and predictive modeling for P/C insurers, revealed that its workers’ compensation customers reported an average of 25 percent loss ratio improvement, nearly double the industry average of 13 percent.
The company announced the results of its annual five-year ROI study this week.
Results were calculated for the period from 2012-2016 across 16 workers’ compensation customers, totaling $1.76 billion in premium. During this time period, insurers using Valen’s analytics products also experienced 53 percent direct written premium growth, compared to 19 percent for the rest of the industry.
This is the second consecutive year that Valen has studied its client base on a trailing five-year period. The previous year’s study analyzed the results of 12 workers’ compensation carriers from 2011-2015 totaling $1.5 billion in premium, showing similar and consistent results across both metrics. Valen clients saw an average of 30.8 percent loss ratio improvement against the industry average of 15 percent and experienced 82 percent direct written premium growth compared to 26 percent.
The report highlights the value of a predictive analytics program.
“Each insurer understands that the predictive model is only one part of the equation, and that to succeed, companies need a data-first approach,” said Dax Craig, CEO of Valen Analytics. “This requires that business strategy and measurable outcomes are clearly defined in order to point the analytics toward what they want to achieve.”
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