Which statement is true regarding the use of data science in insurance according to the material?

Which statement is true regarding the use of data science in insurance according to the material?

• A. Risk prediction is a listed use of data science in insurance
• B. Insurance data science has no role in fraud detection
• C. Data science cannot predict claims
• D. Data science replaces underwriters

Answer: (A)

Data science in insurance helps quantify and manage risk using predictive models. The statement that risk prediction is a listed use is true because insurers routinely build models to forecast the probability of claims and their costs, which informs pricing, underwriting, and reserving decisions. This predictive capability is a foundational application in how data science is used in the industry. The other options misstate the role: there is a real role for fraud detection with data science; data science can and does predict claims (not unable to); and it doesn’t replace underwriters—technology supports and speeds up underwriting, while human judgment remains essential.

Data science in insurance helps quantify and manage risk using predictive models. The statement that risk prediction is a listed use is true because insurers routinely build models to forecast the probability of claims and their costs, which informs pricing, underwriting, and reserving decisions. This predictive capability is a foundational application in how data science is used in the industry. The other options misstate the role: there is a real role for fraud detection with data science; data science can and does predict claims (not unable to); and it doesn’t replace underwriters—technology supports and speeds up underwriting, while human judgment remains essential.