MQP 2012-Predictive Loss Ratio Modeling with credit scores, for insurance purposes

In recent times, credit scores have gained widespread popularity within the insurance industry, especially in the underwriting and pricing, due to their powerful predictive value. The goal of this project was to create a loss ratio model that would improve the predictive ability of the current Hanover premium model through implementation of credit scores. This would enable Hanover to benefit from more informed underwriting and pricing techniques, greater competitive advantage in commercial insurance lines of business and most importantly, more robust underwriting profit. Hanover’s ability to better differentiate the risk types of their customers will ultimately improve their underwriting profit by ensuring that they do not underwrite policies with excessively high-risk.