|[December 05, 2012]
Valen Technologies Debuts Network Data Report, Finds Construction Industry to Have Highest Payroll Misclassification
DENVER --(Business Wire)--
Technologies, an advanced data and analytics provider for property
and casualty insurance leaders, today revealed the first of its Valen
Network Data (VND) reports,
revealing trends identified within Valen's vast consortium data pool.
Outside of rating bureaus, Valen has the largest data consortium in the
industry for workers' compensation, pulling from 4 million recent
policies. Valen is mining this information to provide insurance carriers
with proprietary insights that will assist them in improving
underwriting performance. Examining the four-year period between 2008
through 2011, the first VND report provides insight into which
industries have the highest payroll misclassification. Of the 20
distinct industries identified by the North American Industry
Classification System (NAICS), construction has the largest percentage
of misclassified payroll resulting in an average of 14%, or $76.8
billion in post-recession payroll, according to the VND report.
Interestingly, the misclassified payroll in construction is highly
concentrated in 15 job classification codes.
"We understand that workers' compensation is a difficult line of
business to predict accurately, and misclassification is a struggle for
every insurer. For this reason, we are utilizing our data to expose
interesting trends and insights to the industry, for carriers to act
upon," said Dax Craig, President and CEO of Valen Technologies.
"Carriers who identify misclassification using various predictive tools
are able to better identify those policies that are likely to contain
misclassified exposure. These carriers are thusable to better manage
operating costs and ensure better adherence to their underwriting
appetite," said Craig.
Misclassification affects premiums and rates for insurers, and is a
result of common payroll shifts from one class code to another, class
codes being added or removed, or codes that are incorrectly allocated to
portions of a policyholder's payroll. Misclassified payroll is typically
identified following a post-term audit, comparing initial payroll
allocation to post-audit allocation.
Top Class Codes
After conducting a nationwide study of misclassification, Valen
researchers were able to narrow the findings to 15 job classification
codes. Valen's data modeling team analyzed 106 class codes within
construction, classifying the top 15 as key drivers of
misclassification, which account for 75%, or $57.6 billion of the total
$76.8 billion in misclassified payroll. The total misclassified
payroll amount is based on the most recent Bureau of Labor Statistics
2010 payroll for construction. .
A breakdown of the jobs related to these class codes follows:
Electrical Machinery Repair
Heating, Ventilation, Air Conditioning (HVAC)
"In this age of big data, we want to help insurance carriers minimize
costs resulting from misclassification," said Craig. "We see the
industry embracing technology more and more, helping to mitigate and
offset these types of errors, and taking action against what was
previously unknown. We are dedicated to continue to provide efficient
underwriting practices for insurers."
The first of Valen's Network Data reports is available online.
More information about the company can also be found at www.valen.com.
About Valen Technologies, Inc.
Valen Technologies, Inc. provides turnkey predictive analytics to the
property and casualty insurance industry. Valen's proprietary
contributory database, called ValenNetworks®, is used to deliver
predictive modeling products that improve risk selection, pricing,
underwriting, audit, and inspection processes. ValenNetworks® is
comprised of nationwide data that includes policy-level information for
Workers Compensation, Homeowners, Premium Audits, Commercial Auto and
BOP, combined with disparate, non-industry data sources carefully mined
to maximize usefulness. Our suite of products that includes PropertyRightTM,
InsureRight®, UnderRight®, RateRight®, and AuditRight® are delivered in
a fully hosted environment. The Valen Network Data reports will be
released semi-annually and identify patterns within the workers' comp
and property insurance fields. Learn more about Valen at www.valen.com
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