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The Dangers Of Predictive Analytics In Life And Health Insurance


wealthymattersCurrently the health and life insurance products we buy are static in the sense that right at the beginning of the policy term the insurance company makes an assessment of the morbidity or mortality risk of the person and then agrees to insure them at agreed-upon rates.

Now imagine a scenario of continuous health monitoring and a dynamic premium that reduces when people engage in what is deemed healthy behaviour. A scenario where the insurer provides various “incentives” like discounts on gym memberships , wearables like fitbit and preventive healthcare check-ups etc.

The first time I came across such an idea,2 lines of thought came to my mind simultaneously: Read more of this post

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Results Of The Use Of Predictive Analytics In Life And Health Insurance


wealthymattersPredictive analytics involves the analysis of large data sets ie big data ,to make inferences by identifying meaningful relationships between different variables and using these relationships to forecast what might happen in the future with an acceptable level of reliability.Predictive Analytics includes what-if scenarios and risk assessments.

Now, insurance is an industry where intelligent use of data can provide huge competitive advantages.So over the last dozen years, insurance companies world-wide have tried to be early adopters in using the emerging science of predictive analytics in life and health insurance to get ahead of their competitors.They have attempted to use predictive analytics to segment and underwrite their risks in a more accurate, reliable and cost-effective way. Read more of this post

AI Driven Personalized Life Insurance Premiums; Aye Or Nay ?


wealthymttersThe mortality risk is not the same across different sections of the population.So one of the ways in which life insurance companies have traditionally competed is by restricting their offerings to people who have lower risks of dying early and thus keeping premiums lower and/or bonuses higher.The classic example is the Postal Life Insurance plans of the past that were offered exclusively to government servants vs similar plans of the LIC that were open to all. In moreĀ  recent times,insurance companies target the more educated, affluent, urban ,financially successful professional/managerial class with better living standards and access to world-class healthcare.

Insurtech powered by AI can increase the ability of lifeĀ insurance companies to make fine distinctions in mortality risks, resulting in more risk classes .So one of the merging trends in life insurance is the increasing number of risk classes as insurers seek to better match risk with premiums.Thus in theory, rather than dozens of risk classes, thousands of risk classes or even lakhs of risk classes are possible. In fact if the AI is astute at risk classification, its possible that each policyholder would be in his/her own risk class. In other words, we would have personalized premiums,designed and calculated on a custom basis for each insured person. Read more of this post

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