After a three-month long crowd sourcing competition, three data scientists proved their data analytical prowess in Allstate's predictive modeling competition. The nation's largest publicly held insurer launched the “Claim Prediction Challenge” with Kaggle on July 13, 2011, offering $10,000 to number crunchers worldwide for the best models predicting bodily injury insurance claims based on vehicle characteristics.
Contestants continued to submit algorithms down to the competition's closing minutes on October 12. From 1,290 total submissions and 202 players, three winners emerged, with their models closest to predicting actual claims data. Taking home the first-place prize was Matthew Carle of Sydney, Australia, followed by Owen Zhang of Bolton, Conn., USA (second place) and Jason Tigg of London, U.K. (third).
Aside from monetary motivation, all three winners said they entered the competition to size up their skills against some of the best predictive modeling talents around. The public leader board on the competition site fueled continual model improvements and additional entries.
“As an actuary, I have worked on claims models in the past, and the [competition] allowed me to see how my modeling skills compare with those of other modeling experts,” Carle said. “It also provided a way to improve modeling skills and try new techniques.”
Supplied with Allstate data ranging from 2005 to 2007, contestants analyzed correlations between vehicle characteristics and bodily injury claims payments to predict claims payment amounts in 2009. Based on the data, modelers considered how factors such as horsepower, length, and number of cylinders affect an insured's likelihood of being held responsible for injuring someone in a car accident. (Note that the data provided to contestants contained no personal information about any individual consumers.)
“A competition of this type is definitely a new approach for the P&C insurance industry,” said Allstate Vice President Eric Huls, quantitative research and analytics. “Allstate always looks for ways to embrace new ideas and appreciates the excitement and participation generated in this community of modelers.”
Kaggle noted that the competitive dynamic inherently pushes entrants to produce better work than they would have in isolation and ultimately leads to greater efficiency for insurers. Allstate appears to be taking this cue, as the insurer said it will examine the winning modelers' methods and may use gained insights to complement existing modeling techniques.
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