Today, the world s leading insurers

Transcription

1 analytic model management FICO Central Solution for Insurance Complete model management and rapid deployment Consistent precision in insurers predictive models, and the ability to deploy new and retuned models without delay, is critical to ensuring maximum profit potential and gaining a competitive advantage. FICO has developed FICO Central Solution for Insurance to help insurers monitor the performance of every model across the enterprise, spot degradation and quickly develop and deploy models into operation. The solution gives insurers a scalable, three-tiered approach to centralizing model management and development, and exploring and refining decision strategies. Today, the world s leading insurers increasingly rely on predictive models for improving many types of decisions on prospects and policyholders. While modeling growth in insurance will certainly drive stronger decision management, it will also require a new perspective on model management. The FICO Central Solution for Insurance addresses a common challenge that has arisen with the insurance industry s proliferation of modeling: dispersion. As insurers develop and apply models to numerous decisions across the policyholder lifecycle, and across the enterprise, proper model management of every model is essential to profitability. s must be monitored for performance health, upgraded when degradation is detected, and sometimes even replaced. They must also be launched or relaunched into production without costly delays. Insurers today understand that analytic models are most predictive as close to development as possible speeding them into production is critical to gaining the competitive edge. Figure 1: FICO Central Solution Components ADVANCED DECISIONING PROFESSIONAL DEVELOPMENT Simulation and Testing Refresh Decision Optimization Validation and Deployment Development Data Mart FICO Central Solution for Insurance provides an integrated environment to improve model management, drive accurate outcomes and enhance business decisions. It s not a small problem, either. Insurers can have dozens or hundreds of models in use various marketing models, underwriting and pricing models, fraud detection models or attrition models. Consider the high financial stakes of undetected model degradation, or delayed deployment of new models: Prospecting to unacceptable risks and wasting marketing funds with weak campaign response; poor pricing decisions in underwriting that don t offset risk levels; payment of fraudulent claims; and the loss of desirable policyholders. Use of degrading models equals degrading profits. Without an automated, intelligent platform for managing models, as well as decision strategies, insurers run the costly risks of lost market share and missed opportunities, increased losses and a damaged reputation. That s why FICO has created a scalable path for insurers of all sizes to speed new models to market and more easily and quickly adopt an automated platform for managing their model environment. Tracking Alerts Monitoring Ongoing Validation Management Reporting FOUNDATION The high value of model and decision management FICO Central Solution for Insurance generates value across the insurance lifecycle: Marketing: Better prospecting segmentation, higher response and hit rates, maximized marketing spend. Underwrtiting: Building longerterm policyholder profitability and lower losses, improved exemption exam processes. Claims Fraud: Higher fraud identification, lower false-positives and more efficient case management. Policyholder Management: Reduced attrition of profitable policyholders and more predictable revenue. Make every decision count TM

2 FICO Central Solution for Insurance: A scalable, enterprise solution for rapid deployment and model management For more than 20 years, FICO has introduced successive innovations in insurance analytic technology and business solutions, helping carriers in every segment of the industry advance their decision-making capabilities. Our latest breakthrough, FICO Central Solution for Insurance, responds directly to the challenges presented by today s historic economic changes, conditions that demand more from insurers in their analytic capacity. FICO Central Solution is a tiered, scalable platform designed to help firms more effectively and efficiently maximize the performance of their analytic models across the entire lifecycle of models. Built with proven FICO technologies, FICO Central Solution helps insurers: Develop more robust models and speed model deployment With a standardized, automated approach spanning the enterprise and giving modelers access to data and model repositories, FICO Central Solution enables more precise development; the flexibility to consume qualified models built with other tools; faster time-to-market, lower costs and improved resource utilization. Efficiently maintain models optimal power through enhanced monitoring Identify which models should be updated or replaced, generating more precise and profitable prospect and policyholder decisions. Increase modeling rigor Improve transparency of use, impact of change and ongoing performance with regularly scheduled validations, reports and alerts to ensure control and accuracy. Operate in highly regulated markets FICO Central Solution automates compliance and validation reporting and produces accurate audit trails to address Solvency II or other regional regulatory requirements. Figure 2: Three tiers of FICO Central Solution for Insurance FICO Central Solution for Insurance Advanced Decisioning Tier Flexible entry points with a tiered approach Professional Development Tier Foundation Tier No two insurers view their model environments in precisely the same way, or have the same model management needs. As opposed to a one-size-fits-all platform or solution that could disrupt business and delay time to profit, FICO Central Solution offers a tiered approach (see Figure 2) that allows for flexible entry points striking an optimal balance between critical business needs and resource constraints. It gives insurers the flexibility to add functionality on their own schedule, avoiding Who needs FICO Central Solution? the costs and technical challenges of buying and implementing new software. In addition, our tiered approach allows organizations of all sizes to capitalize on the benefits of greater model efficiency and performance. FICO Central Solution is the only modeling platform that offers a flexible, tiered solution to more rapidly generate profitability. Its three-tiered approach Foundation, Professional Development and Advanced Decisioning allows insurers to readily adopt new capabilities as they bring value to the organization. Business owners Faster organizational reaction times to market and economic change to gain competitive advantage. Enhanced transparency and audit trails without delaying deployments. Analytic directors Higher productivity and throughput from modeling teams; greater ability to deliver impactful models. Easier management of models and empirically derived strategies across multiple decision areas and geographies. Analytic modelers Simpler, more automated handoffs of models to IT; greatly reduced workload in support of implementation. More freedom to create new characteristic summaries that add significant predictive power to models. IT professionals Faster, simpler and easier model implementation and testing; standard production test and release mechanisms. Easier to implement new and updated models at current IT staffing levels; smoother interactions with other teams based on improved rigor in tracking and management. Business analysts/users Improved performance and agility with faster deployment of more predictive models to decisioning processes Fair Isaac Corporation. All rights reserved. page 2

3 The Foundation Tier provides core capabilities around validation, monitoring, management reporting, alerting and administration. It is particularly suited to firms looking to make improvements to existing models and facilitate internal compliance. A web dashboard provides full transparency into the model environment, giving businesses: Complete model inventory for consistency against personnel changes. More accurate decisions, efficient resource use, and consistency and accountability. Streamlined compliance processes, with flexibility to view and report data combined with audit tracking and control. The Professional Development Tier includes all Foundation functionality, plus options for model development, model tuning, consumption or rapid deployment. It helps firms: Improve model development precision. Speed model deployment from 18 to as little as 3 months to improve speed-tomarket and create a competitive edge. Consume qualified models written in other modeling development languages. Achieve greater transparency/clarity of model content. Leverage extensive and flexible reporting capabilities. The Advanced Decisioning Tier is a complete management, development, testing/ learning and optimization solution that helps drive model performance and mitigate risk. In addition to all the services provided in the Foundation and the Professional Development tiers, it supports: Improved model strength by testing various scenarios for best performance. Removal of operational risk by testing on a variety of populations. Validation that new models perform as expected. The application of optimization technology to ensure the most advantageous outcomes, based on objectives and business constraints. A comprehensive architecture for model management FICO Central Solution for Insurance is designed to support business owners, analysts, modelers and IT professionals with an open, flexible architecture that encompasses model management across the entire enterprise and the complete model lifecycle. Through automation and shared access to services, the solution bridges otherwise disconnected workflows and operations for a centralized, consolidated approach to model management from development all the way through to model refreshment and establishing decision strategies. At the core of the FICO Central Solution lifecycle is a shared decision management repository for characteristics, predictive models, business rules for alerts and report definitions (see Figure 3). This provides full transparency into the modeling environment, helping IT and business users with enhanced governance and decisionmaking abilities. Figure 3: FICO Central Solution for Insurance Architecture Decision Simulation and Optimization ADVANCED DECISIONING Build strategies Historical Data Strategies Refresh models Build models Developers and Analysts Historical Data ing Environment Data/ Characteristic s Analytic Discovery Deploy Strategies Production Environment Scoring Results and Decisions Business Outcomes Deployment Import datasets PROFESSIONAL DEVELOPMENT (OR YOUR EXISTING INFRASTRUCTURE) Publish or import models Configure Configure validation run reports FICO Central User Interface Ad-hoc FOUNDATION Validation and Reporting Validation time Configuration and Rules Reports Database Open Validation Source Data Dashboard Review History Control Panel Driver Program Integration Components Analytic Engine Scheduler Load Notify Load Import datasets Generate 2012 Fair Isaac Corporation. All rights reserved. page 3

4 FICO Central Solution for Insurance key features FOUNDATION Validation and Reporting Analytic validation of models executed on a scheduled basis. Automated report generation and notification of availability. Validation executed on models developed in a variety of modeling languages. validation reporting. The five pre-built reports are: Validation summary report easily spot degraded or degrading models that need attention, and view generated alerts and rules that triggered them. KS, GINI, divergence by quarter (cross-metric, cross-period or both; grid- or chart-based reports). ROC charts reporting easily understand how ROC properties change over time. Population stability index quantify and locate shifts in score population. Characteristics analysis quickly analyze distribution changes in the predictors driving score shifts, generate odds-to-score analysis and generate accuracy plots for continuous outcome models. Monitoring A web-based dashboard for managing all models. definition and registration to introduce new models. Scheduling facility for automating validation reports. User-defined validation triggers and alert rules. Cumulative reviewer annotation history at performance level for audit and tracking purposes. On-demand report generation, including ability to query into custom sub-segments. Value-Based Options Ability to define new custom business performance metrics and associated reporting. Combine multiple reporting modules into a single tracking report per audit requests. New reports developed using programmatic APIs. Easily modify and add configuration screens per client requirements. PROFESSIONAL DEVELOPMENT (Includes all Foundation capabilities plus Development, Tuning and Consumption, and Rapid Deployment) Consumption Consume qualified models written in other modeling development languages. and Rapid Enable rapid production deployment of models. Deployment Integrated environment for development, authoring & testing. Complete lifecycle management with full IT governance and transparency to empower business users. Provide central repository for rules and models. Ability to import models from variety of modeling languages, including PMML. Support for Java, Microsoft.NET and COBOL. Unparalleled run-time performance. Development and Tuning Ability to rapidly develop new predictive models based on business specifications. Outstanding analytic workbench to discover and refine palatable, transparent predictive models. Enable full-fidelity, white-box model deployment. Substantially increases analytic productivity. Common repository, data and reporting with DM Tools. Variable Library authored in common structured language. Comprehensive model diagnostics and reporting. Open and extensible scripting interfaces. Eclipse-based graphical workbench and IDE. Leverage stored model performance data to generate new models. s updated from scratch or recalibrated (retuned) and rapidly deployed Fair Isaac Corporation. All rights reserved. page 4

5 ADVANCED DECISIONING (Includes all Foundation and Professional Development capabilities, plus Simulation and/or Decision Optimization) Simulation The Simulation capability of FICO Central Solution for Insurance enables business and technical users to configure and run simulations to explore the business impact of rules prior to deployment, making it possible to identify opportunities for improvement and avoid costly errors in strategies that might otherwise be missed. This includes: Simulation of results using sample data, with ability to change a calculation value and rapidly perform multiple What if? alternative scenarios. Champion-challenger testing of competing models and/or decision strategies on random samples from production populations. Decision Optimization A complete solution for representing, simulating and analyzing the business impact of automated decisions. By adding Decision Optimization capabilities to FICO Central Solution, an insurer can: Expand the application of analytics beyond modeling to decisions to pinpoint the best prospect or policyholder treatment strategies while balancing complex and often conflicting business objectives. Translate possible actions into business measures with the ability to choose the most advantageous path to results. Incorporate key performance indicators, like profit and revenue. Accommodate finite global constraints, such as total claims losses and available resources. Expose and quantify risks. The solution architecture also facilitates all users activities across the model lifecycle. Using a management dashboard, users can schedule validations, manage alert rules, configure user or procedural task routing, select report templates, request on-demand validation reports, document validation activities and generate management reports. The solution also accommodates other technologies allowing teams to register and import models from various development platforms, including models written in other languages, and design custom reports using scripting capabilities. Leverage a powerful alert function A key feature of FICO Central Solution for Insurance is a powerful user-defined alert function. This function allows the user to design alerting rules based on model tracking statistics such as Gini, KS and population, define notification policies, craft informative alerting messages, and set severity thresholds, all through the web-based Management Dashboard. When configuring validation jobs, insurers specify where and to whom to send generated validation alerts. For example, it could be an address of the owner of the model portfolio for which the alert was generated. The Alert function allows insurers to: Automate tracking of hundreds of models. Immediately recognize any models that have drifted outside acceptable performance boundaries. Prioritize models that need immediate attention. Quickly assess total model performance. Simplifying compliance When operating in markets with regulatory requirements, or for meeting internal audit requests, model management must align with defined guidelines. FICO Central Solution for Insurance provides comprehensive compliance and validation reporting, audit tracking and greater transparency into how models are developed, facilitating greater audit compliance and relieving pressure on resource constraints. Support for Solvency II Preparation For insurers operating within the European Union, the functionality of the FICO Central Solution aligns with the requirements of the impending Solvency II and can help prepare for the tenets of this legislation. FICO Central Solution provides: A view across silos, including geographies, lines of business and process areas. A means to assess accuracy of model health, which feeds into critical decision areas with capital impacts. Improvements in data quality and availability, as well as advanced management of analytic assets. Business-user ownership and control. Complete transparency for audits Fair Isaac Corporation. All rights reserved. page 5

6 Getting started Transforming an analytic environment may seem daunting, but it doesn t have to be. In addition to the FICO Central Solution for Insurance, FICO offers interim services for insurers to take initial steps to improving their modeling, or assess the appropriate tier of FICO Central Solution to support their operations, including: FICO Analytic Health Check Consulting Service We assess your models validity and use in risk management strategies, helping you understand how changing market conditions affect model performance, and allowing you to gain deeper insights to develop a greatly improved model management roadmap. FICO Validation Service We can serve as an independent agnostic validation service provider. This is often useful for insurers that are trying to develop best practices for model management, or are in early stages of deploying analytics. FICO Central One-on-One Meet with FICO analytic and industry specialists during a two- or four-hour session to discuss your current analytic environment and assess options to address your predictive model needs. FICO maintains a long track record of teaming with our clients to help them manage the full lifecycle of their analytic environments. Our team of experts stand ready to help you develop your strategy for competitive positioning. FICO, Central and Make every decision count are trademarks or registered trademarks of Fair Isaac Corporation in the United States and in other countries. Other product and company names herein may be trademarks of their respective owners Fair Isaac Corporation. All rights reserved. 2858PS 04/12 PDF For more information US toll-free International web (0) [email protected]