NEW FIRM TARGETS NEED FOR IMPROVED UNDERWRITING DECISION-MAKING

Times may be tough for vendors along with the insurance companies they serve, but difficult times carry their own opportunities, in the opinion of Dax Craig, president and CEO of Valen Technologies, which has just launched with the announcement of its first customer, Indiana Lumbermens Mutual Insurance Co. (Indianapolis).

At a time when insurers are striving to make better underwriting decisions, the Denver-based vendor provides predictive analysis software that applies statistical learning theory to the problem, according to Craig. "Most technology vendors are attacking the expenses -- they're trying to automate processes, make things more efficient -- which is an excellent use of resources," he acknowledges. "But we're attacking on the other side: Let's help them make better core decisions. If we can help them to make a better risk decision on the front end, that's a profit center right there that most vendors are not attacking."

Valen's Risk Manager software applies combinations of its nearly 60 built-in algorithms to accomplish insurance-specific goals -- such as to maximize net profit or ensure a particular limit on loss ratios -- and reveals non-obvious relationships among policy, claims and underwriting data, Craig explains.

"Using a rules engine, we give carriers the ability to look at every potential risk factor that is collected, whether on the application or through a ChoicePoint or other source, and match that against the carrier's history," he says. "By analyzing that historical experience, we're giving the underwriter complete recall of a carrier's experience, all at the touch of a button, basically."

Indiana Lumbermens will use the Risk Manager to evaluate new or renewal accounts and identify potentially profitable business niches. "We expect Valen's system to be effective and reliable in providing valuable benefits to our workers' compensation underwriting department, including smoothing out the overall volatility of our loss ratios," says John F. Wolf, the carrier's president.

While Risk Manager is available on a licensing basis, Valen also offers it as a Web service, according to Craig. "I think carriers, by and large, are tired of paying massive license fees and throwing projects in the trash. What we're trying to do is give them ongoing value that they pay for," he comments.

Anthony O'Donnell has covered technology in the insurance industry since 2000, when he joined the editorial staff of Insurance & Technology. As an editor and reporter for I&T and the InformationWeek Financial Services of TechWeb he has written on all areas of information ... View Full Bio