1. Confidential. This presentation is provided for the recipient only and cannot be reproduced or shared without Fair Isaac Corporation's express consent. © 2011 Fair Isaac Corporation. 1 2011 Canadian Insurance Outlook Analytic-Driven Solutions for Insurance Breakout Session: What Insurance CIOs Need to Know About Decision Management January 14, 2011

2. © 2011 Fair Isaac Corporation. Confidential. 2 2 Agenda »Imperatives for 2011 »Gaining an Analytic Advantage » New Rules Based Systems » Predictive Modeling and Analytics » Sophisticated Real Time Fraud Protection

3. © 2011 Fair Isaac Corporation. Confidential. 3 Gartner Research—Imperatives for 2011 Top 10 Technologies With the Greatest Impact for the Property and Casualty Insurance Industry By: Kimberly Harris-Ferrante 1.Modern Policy and Claims Management Systems 2.Web Services and SOA Tools 3.Business Intelligence and Analytics 4.Predictive Modeling Tools 5.Advanced Fraud Detection Solutions 6.Web 2.0 and Social Networking Technology 7.Product Development and Configuration Solutions 8.BPM Solutions Including Workflow and Rule Engines 9.Portal and Internet Technologies 10.Mobile Devices/Technologies Our Focus Today

4. © 2011 Fair Isaac Corporation. Confidential. 4 2011 Imperatives BPM and Rules-Based Systems »The adoption of systems (enhanced workflow and BPM capabilities, rules separate from the source code for easy configuration, supporting industry standards (e.g., ACORD), and built on newer technology platforms) by personal and commercial P&C insurers can provide significant value, including: »Reduced total cost of ownership when legacy systems are decommissioned »Faster rules and workflow changes »Easier integration with surrounding systems »Reduced challenges with staffing to support old technologies and programming languages Gartner Research: Top 10 Technologies With the Greatest Impact for the Property and Casualty Insurance Industry, 2010, Kimberly Harris-Ferrante.

5. © 2011 Fair Isaac Corporation. Confidential. 5 2011 Imperatives Predictive Modeling »Using predictive modeling technologies, insurers can analyze data and create models that will enable them to predict future behaviors or outcomes. For example, predictive modeling can help with: »Understanding customer risk during underwriting »Predicting "next likely to purchase" for diversified companies »Modeling for customer attrition »Projecting claims impact based on a pending event (e.g., a hurricane that is poised to hit land) Gartner Research: Top 10 Technologies With the Greatest Impact for the Property and Casualty Insurance Industry, 2010, Kimberly Harris-Ferrante.

6. © 2011 Fair Isaac Corporation. Confidential. 6 2011 Imperatives Fraud Protection »It is key that insurers reduce losses and leakage to retain profitability. Better control of fraud is essential in accomplishing these goals. Traditional fraud detection solutions have many shortcomings, including: »They typically run in batch, which creates a latency from the actual event »They use only structured data analysis »They lack sophisticated modeling capabilities »Advanced tools analyze data (structured and unstructured) to identify fraudulent claims in real time at point of data entry. This will assist P&C insurers in reducing losses that result in driving up operational costs and may result in companies having to increase insurance premiums based on these losses Gartner Research: Top 10 Technologies With the Greatest Impact for the Property and Casualty Insurance Industry, 2010, Kimberly Harris-Ferrante.

7. © 2011 Fair Isaac Corporation. Confidential. 7 7 FICO is the leader in Decision Management— transforming business by making every decision count

8. © 2011 Fair Isaac Corporation. Confidential. 8 Dimensions Of Decision Management Precision: accurate predictions permit more accurate actions and treatments allowing better management of risk, costs, losses, etc. Consistency: consistent decisions and customer treatment, driving a consistent customer experience regardless of contact or request Agility: flexible decisions and processes enables faster responses to changes in customer behavior, economic drivers, competition, regulation Speed: at the core of improvements in automated processes is the need to make decisions in real time Cost: control of decision unit and business costs improves overall business performance driving profitability What is Decision Management? FICO’s Point of View Decision Management (DM) is an approach to improve, automate and connect organizational decisions to enhance business performance through the application of a number of key technologies

9. © 2011 Fair Isaac Corporation. Confidential. 9 Increase the Success of Your Decisions Predictive analytics for greater precision Business rules management for greater control Optimization for new levels of performance »Execute more relevant and targeted customer offers »Control risk exposure and reduce losses »Identify and stop fraud faster »Control decisions across business lines and geographic borders »Change faster than the competition to seize new opportunities »Comply with regulatory requirements faster and at lower cost »Advance your business strategy systematically, with every decision »Assign optimal actions to reach specified objectives

10. © 2011 Fair Isaac Corporation. Confidential. 10 Decision Management Maturity Curve Diagram Connect Simulate Automate Decision Management Maturity Control Refine Optimize

11. © 2011 Fair Isaac Corporation. Confidential. 11 Data Warehouse FICO’s Decision Management Architecture Customer Behavior and Strategy Performance Analytic Development Rules Management [Blaze Advisor] Business Intelligence T R A N S A C T I O N E X E C U T I O N D E V E L O P M E N T & M A N A G E M E N T D E C I S I O N S E R V I C E OPERATIONAL SYSTEMS E-Business Process Data, Rules and Analytics to Determine Best Decision Decision Request Decision DECISION SOLUTIONS ERP CRM Policy Admin Billing Supply Chain Marketing Management Underwriting, Pricing and Product Mgmt. Claims Processing and Mgmt. Fraud Protection DM Repository Compliance

12. © 2011 Fair Isaac Corporation. Confidential. 12 Core Component of Decision Management Architecture »Automate, Improve and Connect Decisions »Scalable rule services for speed and consistency in claims processing, policy enrollment »Make the right decision to meet your business goals »Deliver fast, accurate, and consistent decisions across functions, channels and customer touch points »Designed for Business User Control »Quickly find and modify underwriting, pricing and claims processing policies »Verify and validate changes, i.e. new product configurations »Simulate impact on business metrics, i.e., price tier expansion impact on loss ratios »Underwriting, claims and marketing management control business rules FICO TM Blaze Advisor ® business rules management system

13. © 2011 Fair Isaac Corporation. Confidential. 13 FICO™ Model Builder »Advanced predictive modeling »Build and deploy high fidelity predictive models using proven FICO approach and sophisticated tools »Seamless deployment »Integrates directly with FICO™ Blaze Advisor® business rules management system repository to share variable formulas and model components for rapid deployment within rule projects Blaze Advisor Rules Project Model Builder

14. © 2011 Fair Isaac Corporation. Confidential. 14 FICO™ Blaze Advisor ® Can Import Analytical Models Model Development Blaze Rules Repository Imported models are executed as Java components in the decisioning service. Rule developers and business users cannot see/modify them Imported models are available to rule developers and business users can see and modify them PMML integration—Open Standard Rule Service.NET Rule Service Java Code Gen COBOL SAS Data Sets *The Predictive Model Markup Language (PMML) is an XML-based language which provides a way for applications to define statistical and data mining models and to share those models between PMML compliant applications. Black Box (Java) White Box (PMML)

15. © 2011 Fair Isaac Corporation. Confidential. 15 FICO™ Xpress Optimization Suite »Math modeling environment and algorithm libraries that enable optimization experts to create solutions faster and solve problems that are too large to handle by solvers alone »Xpress programs and libraries can be called directly from Blaze Advisor to optimize real time decisions »Solves problems like “Given a set of policyholders and prospects, what premium amount should I offer them meet an overall business objective as minimizing loss ratios?”

16. © 2011 Fair Isaac Corporation. Confidential. 16 Underwriting Analytics and Rules Based Systems Blaze Advisor Rule Service(s) How Blaze Advisor Works Goal: Straight Through process— Minimize processer Interaction Blaze Advisor Rule Service(s) Rules, Strategies, Models, Scores e.g. “Flag or Process?” e.g. “Acceptable Risk?” » Increase Throughput » Minimize Risk » Minimize Reserves » Reduce Fraud » Maximize Profitability Automation challenges »Product assignment? »Pricing? »Customer Segment? »Propensity for Fraud? »Policy Parameters? Analyst Rule Control Define Deploy Custom Models CBIS Rule Repository

17. © 2011 Fair Isaac Corporation. Confidential. 17 Simulate Business Impact of New Claim Strategies Create Candidate Rule-based or Code-based Services Blaze Advisor Rule Service(s) How Blaze Advisor Works Blaze Advisor Rule Service(s) Blaze Advisor Rule Service(s) How Blaze Advisor Works Code-based Service(s) Candidate Blaze Advisor Rule Service(s) How Blaze Advisor Works Blaze Advisor Rule Service(s) Code-based Service(s) Current/ Production Current/ Production Results Execute Simulation Comparison Report generation Input Records Candidate Results

18. © 2011 Fair Isaac Corporation. Confidential. 18 Comprehensive Fraud Solution Business User Clams Database Insurance Fraud Management System Strategies developed using Blaze Advisor Rules Maintenance Application Strategies, scores and reason codes applied to return recommended action Rules Repository Rules High Scoring claims tagged to seed Link Analysis relationships Each claim scored to assess probability of fraud and generate reason codes Fraud Predictive Model Link Analysis Rules Maintenance Application Program Interface Claims Transactions Claims Fraud Data Extract Scheduled batch of updated and new auto claims delivered in specification format Link Analysis reports generated, modified and reviewed and by Business User

19. © 2011 Fair Isaac Corporation. Confidential. 19 © 2011 Fair Isaac Corporation. Confidential. 19 Improve Profitability of Core Insurance Operations Marketing Point of Sale Decisions Underwriting Fraud Solution Development 50% increase in new business 99% increase in applications processed automatically 8% decrease in combined ratio 35% decrease in fraud losses through early detection 50% decrease in solution development time enabling quicker speed to market

20. © 2011 Fair Isaac Corporation. Confidential. 20 Decisive Underwriting and Accurate Pricing Client: Kemper Auto and Home, a leading provider of personal lines property and casualty insurance Challenge: Replace paper-based, manual underwriting system with an efficient, streamlined and consistent underwriting process SolutionResults »FICO TM Blaze Advisor ® business rules management system »FICO analytic models »Real-time underwriting of new business »Lowered combined ratio by 8 points »Increased pricing tiers from 6 to 24 to identify profitable risk—and offer these customers the right products before competitors do. »Business users manage rules; don’t compete for IT resources

21. © 2011 Fair Isaac Corporation. Confidential. 21 Improved Time-to-Market Client: One of the largest P&C insurers in the US; seller of commercial and personal lines insurance through the agency channel Challenge: Change product development from a reactive to a proactive process to support business growth SolutionResults »FICO TM Blaze Advisor ® business rules management system »30,000 hour savings annually with increased pricing and rate change efficiency »Saved 1,000 hours during annual recalibration of the underwriting model »9,000 hour savings annually for new product introductions »Doubled product refresh rates

22. © 2011 Fair Isaac Corporation. Confidential. 22 Transforming a Business Client: Aviva, the world’s 5th largest insurance group; the biggest in the UK, serving 50 million customers worldwide Challenge: Double the volume of business without increasing operational costs SolutionResults »FICO TM Blaze Advisor ® business rules management system »IT costs reduced by 20%, a game-changing cultural impact for the organization by empowering the business team »Policy enrollment time reduced from 22 days to 6 minutes »Improved customer service with real-time policy changes and claims service

23. © 2011 Fair Isaac Corporation. Confidential. 23 © 2011 Fair Isaac Corporation. Confidential. 23 Make Every Decision Count™ Harness breakthroughs in analytics to give your decisions greater precision, consistency and agility Release the untapped potential in your customer data to create profitable growth Rely on the expertise that has helped thousands of businesses in 80 countries Transform Decision Management into a competitive advantage with the industry leader

24. © 2011 Fair Isaac Corporation. Confidential. 24 © 2011 Fair Isaac Corporation. Confidential. 24 Open Discussion

25. © 2011 Fair Isaac Corporation. Confidential. 25 Discussion Topics »What are your top IT priorities for 2011? »Implementing a rules-based environment: Challenges and advantages. »Developing predictive analytic models: data sources, frequency of deployment, strategies for test and learn. »Strategies you are employing for real time fraud protection.

26. Confidential. This presentation is provided for the recipient only and cannot be reproduced or shared without Fair Isaac Corporation's express consent. © 2011 Fair Isaac Corporation. 26 THANK YOU January 12, 2011