NU Online News Service, Feb. 1, 3:11 p.m.EST

Nearly 90 percent of U.S. insurance companies said the use ofpredictive modeling enhanced rate accuracy in 2010, according tothe results of a survey conducted by Towers Watson.

The global professional services company reported that 70percent of companies said the same in 2009. The use of predictivemodeling in the U.S. is up about 10 percent across all lines ofbusiness except commercial property/business owners packages.

The survey indicates the use of predictive modeling continues togain momentum. For example, 76 percent of the companies surveyedsaid they realized an improvement in loss ratio compared to 57percent the previous year, and 68 percent said it improvedprofitability compared to 55 percent in 2009.

"Effective implementation of predictive modeling enhances riskselection and pricing, leading to greater insurer profitability andthe potential for growth in market share," said Brian Stoll, TowersWatson senior consultant and one of the survey's authors.

Forty-two percent said the use of predictive modeling expandedthe company's underwriting appetite.

Furthermore, 83 percent of auto insurers and 61 percent ofhomeowners insurers said they have put predictive modeling intopractice compared to 76 percent and 44 percent, respectively, in2009.

The use of the tool increased to 32 percent of workers'compensation companies compared to 18 percent the prior year.

"Personal lines and commercial lines carriers are seeing thatpredictive modeling benefits greatly exceed the costs and, overall,their plans clearly indicate a desire to move forward," saidKlayton Southwood, senior consultant and the other author of thesurvey.

The survey also revealed that carriers are planning moreanalyses, enhancements and an extension of use to more productlines.