Christopher McKeon, student in the Insurance Management program and Senior Vice President, Head of Commercial Casualty and Risk Management at Everest Insurance, recently published “The Promise of Predictive Models” in Insurance Thought Leadership.
He wrote the piece in response to his Global Legal and Regulatory Ecosystem class, taught by Sandra Bograd. The article explores how advances in big data and AI will allow for actionable insights in the insurance industry. These new technologies have the ability to point organizations towards better risk selection, more accurate pricing, and effective risk management.
McKeon writes that the industry has found itself in a “data arms race,” with carriers “leveraging their datasets and engaging with insurtechs that can help.” Organizations that are able to navigate predictive technology will find themselves with the competitive advantage. “By leveraging datasets previously unavailable, or in formats too unstructured to use, algorithmic models can better categorize and rank risks, allowing an underwriter to select and assign the most appropriate price that rewards better risks and surcharges those that are riskier.”
McKeon discusses other considerations underwriters need to take into account, such as assessing bias when developing algorithmic modeling, as well as the need to establish new sets of standards and governance along with the technological advances.
Read the full article in Insurance Thought Leadership.