What Insurance Carriers Can Learn from Fantasy Football

I love this time of year.  Shorter days lead to crisp evenings, parental tensions ease as the kids prepare to go back to school and I get to embark on an annual rite of passage – my fantasy football draft. 

I count myself amongst the 27 million-plus fantasy football fans who have found a unique way to maintain bonds with friends and forego polite dinner conversation to discuss the latest injury to their starting running back.  And, as the reigning league champ, the stakes have never been higher with a much coveted trophy and 12 months of bragging rights on the line.   

So as I evaluate my draft board for the upcoming season, it is critical that I take a variety of factors into account.  In order to be successful, I need to look at unique characteristics of individual players and determine my appetite based criteria such as:

  • Position and type of player
  • Future performance
  • Character or moral hazards (after all, an indicted wide receiver can’t accumulate meaningful stats for my team)
  • Historical statistics

And I need to balance those characteristics against the finite roster spots my team has available and determine a desirable team composition based on several factors including:

  • Average production by position
  • Team production
  • Roster depth
  • Variable risk levels

As an insurance carrier, does any of this sound familiar? I can’t help but draw a parallel to the challenges insurance carriers face as they try to underwrite, build and sustain a profitable book of business. Instead of player attributes, carriers must understand the characteristics that define the risk, profit potential and attractiveness for each submission or renewal.  And, they must carefully balance each risk against the total portfolio and the impact it will have on the profitability of the organization overall. 

Historically, this has been viewed as the role of the underwriter and responsibility for driving these decisions has fallen squarely on their shoulders.  The reality is that efficient and effective risk selection is more than just the underwriter’s responsibility – it touches many parts of an insurance carrier’s organization.  Carriers must align the executive suite, distribution channels, underwriting management and the underwriters around a common set of objectives and execute data-driven strategies that deliver underwriting performance in line with profitability measures and long-term growth plans.  Efficiency must be combined with the metrics that drive business performance and impact profitability and take advantage of opportunities to:    

  • Optimize and extend the value of existing distribution and/or CRM solutions
  • Leverage predictive analytics to determine capacity priority based on factors such as customer value and risk
  • Deploy dynamic underwriting strategies aligned to  product or margin objectives maximize profitability potential
  • Enforce channel behavior and uptake by guiding distribution channels to best products, offers, etc.
  • Adaptive, self-learning models automatically adjust based on past success and failures

Carriers that effectively leverage this type of capability will wind up with their own bragging rights in the insurance market.  Like my own fantasy football team, they will be positioned to dominate the competition for years to come.