FICO, a provider of analytics and decision managementtechnology, launches a new solution aimed at improving the ROI forpredictive models used in insurance. FICO Model Central Solutionfor Insurance enables insurers to reduce model deployment times byas much as 50 percent, while also providing the first indicationsthat a model's performance may be damaging profitability.

Insurers use predictive analytics models in mission-criticaldecisions, but today's model management processes hinderperformance. Most insurers have inconsistent or inefficient methodsfor tracking model performance, updating models, and implementingnew models in production systems.

In a recent FICO survey, 64 percent of insurers said they lackedthe ability to rapidly deploy or update models to maximize businessimpact. One-third of insurers surveyed said that implementing a newmodel takes four-to-six months, and 51 percent said it takes sixmonths or longer.

"Leading insurers rely on analytics across lines of business formarketing, customer management, underwriting, claims, and fraudprevention," says Russ Schreiber, FICO vice president and head ofthe company's insurance practice. "High-performing analytics are acornerstone of high-performing insurers. The value Model Centraloffers is the ability to identify when model performance isdrifting and then accelerate the deployment of more predictivemodels regardless of the modeling technology used."

Model Central presents a management dashboard of overall modelhealth, providing an early warning system that alerts personnel toperformance degradation so they can take action before businessdecisions are impacted. It also creates astandardized process foreasy management and monitoring of models, which have become centralto business decisions made by insurers, and deploys new modelsquickly and efficiently—up to 50 percent faster—for improved timeto value and return on investment.

Model Central coordinates model validation, task tracking andmanagement reporting, storing audit trails to satisfy compliancerequirements. It integrates models from various programminglanguages into one environment, further saving time and ITresources. It also improves business outcomes dramatically with theintegration of simulation and testing capabilities and optimizationof decisions.

For insurers operating within the European Union, the FICOsolution lays a foundation for meeting Solvency II's capitaladequacy and risk management requirements. It provides a viewacross silos, including geographies, lines of business, and processareas; access to legacy assets; improvements in data quality andavailability, as well as advanced management of analytic assets;and complete transparency for audits. These capabilities alsoaddress insurance regulations in other parts of the world.

"From mismatching product offers to getting the price wrong tomissing fraudulent claims, weak analytic models hurtprofitability," says Schreiber. "Yet in our recent survey, just 18percent of insurers said they had a well-organized system formanaging model performance. New insurance regulations such asSolvency II in Europe and similar proposals in theU.S.mandate thatinsurers do better than this."

"An analytics-driven business organization is where insurershave to be," says Karen Pauli, a research director at CEBTowerGroup. "Those analytics need to be quickly deployed andactively managed to maximize their value to the business. Insurersthat excel at the operational side of predictive models will have acompetitive advantage in the market."