Prescriptive Analytics has been hailed as the final piece of the Business Analytics (BA) puzzle. It starts with descriptive analytics - describing what HAS happened and why; next is predictive analytics - forecasting what MIGHT happen; Prescriptive Analytics aims to offer insight into what ACTIONS to take next, suggesting the best course of action among available choices.
Predictive Analytics and Insurers
Every business depends on forecasting to some degree. Accurately predicting future market conditions, product demand, expenses and revenue is an important endeavor for any company, particularly so for insurance companies. The ability for an insurance company to accurately predict the cost of its policies, and avoid adverse selection (total number of insured’s weighted towards higher risk policies) dramatically impacts it's profit or loss. Subsequently, the insurance industry is a perfect fit for Predictive Analytics.