predictive data modeling a case study for data modeling
TRANSCRIPT
Predictive Data ModelingA CASE STUDY FOR DATA MODELING
•Ken Reed, Loss Control Services Manager
•Barbara Rhoades, Chief Executive Officer
Towers Watson
Content re-printed with permission from Towers Watson ©2013 all rights reserved
Data Analysis
•Why capturing your data is important…
•What you do with it – how to react to it…
How We Have Used Our Data•OTRP manages the process through the Loss Control Summit
•Majority of our risk is Auto Liability
•All of our data is based on what we know…
Annual OTRP Loss Control Summit
Lo
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Working Together to
Reduce Transit Losses
Standing Strong
• Provide annually updated analysis of loss trends.
• Use data to drive loss control efforts and employment of resources
• Create awareness of emerging risk/exposures and develop responses
•Create opportunities to share ideas and resources
Loss data from 1/1/2003 to 11/30/2011Event basedOnly looked at events with incurred values
Total of 1910 EventsTotal Incurred of $14,152,647Average Loss per Event of $7,410
Examples of How we have presented our Loss Data
All Events by Year
2003 2004 2005 2006 2007 2008 2009 2010 20110
50
100
150
200
250
300
186
219
267
242235
213
187195
166
All Incurred by Year
2003 2004 2005 2006 2007 2008 2009 2010 2011 $-
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
$3,500,000
$3,477,113
$1,514,118
$1,784,810
$2,548,735
$1,321,615
$1,017,440 $879,720 $891,568
$717,529
Average per Event by Year
2003 2004 2005 2006 2007 2008 2009 2010 2011 $-
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
$16,000
$18,000
$20,000
$18,694
$6,914 $6,685
$10,532
$5,624 $4,777 $4,704
$4,572 $4,322
Events by Type
Collision; 1485; 78%
Passenger; 181; 9%
Wheelchair; 84; 4%
Pedestrian; 42; 2%
Misc/Other; 118; 6%
Incurred by Type
Collision7093782.38999
99952%
Passenger955308.179999998
7%
Wheelchair1081283.93
8%
Pedestrian3672274.15
27%
Misc/Other825969.85
6%
Average per Event by Type
Collision
Passenger
Wheelchair
Pedestrian
Misc/Other
$- $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 $80,000 $90,000 $100,000
$4,782
$5,278
$12,829
$99,809
$7,001
Average/Event
Collisions Total of 1485 Collision Events Total Incurred of $7,101,609 Average Loss per Collision of $4,782 Collision breakdown
1. Fixed Object2. Rear End Collision3. Backing4. All Other
Collision Events by Year
2003 2004 2005 2006 2007 2008 2009 2010 20110
50
100
150
200
250
129
168
209
181191
161152
167
127
Collision Incurred by Year
2003 2004 2005 2006 2007 2008 2009 2010 2011 $-
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$364,068
$691,721 $732,517
$2,300,449
$655,093 $546,126
$609,577 $629,429 $572,630
Collisions by TypeFixed Ob-ject; 300;
20%
Rear End; 262; 18%
Backing; 113; 8%
All Other; 810; 55%
Incurred by Collision TypeFixed Ob-
ject; 919375.09;
13%
Rear End; 1928816.93; 27%
Backing; 155492.41;
2%
All Other; 4097924.69; 58%
Average per Collision by Type
Fixed Object
Rear End
Backing
All Other
$- $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $8,000
$3,065
$7,362
$1,376
$5,059
What is Predictive Modeling?
Historical Actuarial PerspectiveHistorically, actuaries evaluated rates to set pricing and reserves. In a traditional approach they look at characteristic separately
Univariate Analysis
Describes the tradition approach of estimating the impact of one factor without considering others
This is often called a “one-way” analysisContent re-printed with permission from Towers Watson ©2013 all rights reserved
Univariate Analysis
Collision
Age of Vehicle
Number of
Miles
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With the advanced in computing technology, actuaries are able to use complex mathematical equations to estimate the impact of all variables simultaneously. This is called..
•Multivariate AnalysisCollisio
nMiles
Age of Vehicl
e
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•Actuarial Term for the computations underlying a multivariate analysis is:
•GLM or Generalized
Linear Modeling
Content re-printed with permission from Towers Watson ©2013 all rights reserved
Benefits of Predictive Modeling• Explore impact of multiple variable simultaneously while taking into account their relationships or correlations
• This allows for more effective pricing in a competitive market
• Better claims handling though identification of claims drivers
• Reduction of risk though probability analysis
Content re-printed with permission from Towers Watson ©2013 all rights reserved
Benefits of Predictive Modeling• Explore impact of multiple variable simultaneously while taking into account their relationships or correlations
• This allows for more effective pricing in a competitive market
• Better claims handling though identification of claims drivers
• Reduction of risk though probability analysis
Content re-printed with permission from Towers Watson ©2013 all rights reserved
How is Predictive Modeling Being Used?
Can Integrate all aspects of your operations and identifies the value of all customers
• Develop Rules• Credit Analysis• Eval Agents• Target Inspections
Underwriting
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Competitive Advantage
PriceImprove Retention
& Satisfaction
Claims Advantages•Reduce Claim costs•Improve efficiency in claim handling process – shorten cycle
•More Accurate reserving practices•Better claim Experience leads to higher customer satisfaction
Content re-printed with permission from Towers Watson ©2013 all rights reserved
Perform a Claims TriageUse Predictive Modeling to identify complicated claims based on multivariate analysis
• Routed to specialists• Correct Experience for Adjuster• Medial Provider?• Attorney involvement• Return to work• Case management
Content re-printed with permission from Towers Watson ©2013 all rights reserved
Content re-printed with permission from Towers Watson ©2013 all rights reserved
Content re-printed with permission from Towers Watson ©2013 all rights reserved
Content re-printed with permission from Towers Watson ©2013 all rights reserved
OTRP Utilized to the study to identify patterns of potential future losses
Predictive Data Analysis allowed us to look at our losses differently. We normally analyze what HAS happened.
This allowed us to see what is likely TO happen.
Predictive Data Analysis
Predictive Data Analysis
Predictive Data Analysis
OTRP’s Experience• Re-confirmed what we already knew to be true
• We were able to identify areas of concerns for specific members (not just the pool as a whole)
• Let us think about claim indicators that we might not have otherwise.
FOR OTHERS:
Great management tool for a “hands-off” organization.
Claims management tool for claims intensive organizations.
Creates the possibility to see things in a new and different way
StandingStrong
OHIO TRANSIT RISK POOLService ● Stability ● Security
Serving Public Transit since 1994