What Is Predictive Analytics?
The volume of data and information collected in every economic and industrial sector is growing by leaps and bounds. This availability of “big data” is driving a paradigm shift in the business world. With advances in technology, predictive analytics is now within your grasp and is used in the areas of planning and decision-making. Predictive analytics can provide a competitive advantage.
Using the data collected, predictive analytics, or predictive modelling, draws on a number of statistical techniques to analyze past and present events in order to predict future events or behaviours based on a set of assumptions.
Businesses use predictive analytics to manage risk, optimize operations, define business strategies, plan workforce requirements and forecast cost trends for employee benefit programs.
Predictive analytics is appropriate for every economic and industrial sector. The fields of applications are limitless.
Predictive analytics is transforming the actuarial field and providing decision makers across all industries with access to analyses that facilitate decision-making. It is used in a wide range of contexts such as:
- Operations management: supply forecasting and resource management;
- Human resources: identifying factors that influence employee engagement;
- Wage loss insurance: identifying risk selection criteria;
- Life insurance: measuring risk factors leading to policy lapses;
- Prescription drug insurance: producing claim amount projections for high-cost claimants;
- Home insurance: implementing a risk scoring system for ratemaking purposes;
- Liability insurance: optimizing the adjudication process;
- Employee benefits: optimizing self-insurance;
- Asset management: optimizing asset allocation for life cycle portfolios.