Predictive modeling is a commonly used statistical technique to predict future

behavior. Predictive modeling solutions are a form of data-mining technology

that works by analyzing historical and current data and generating a model to
help predict future outcomes. In predictive modeling, data is collected, a
statistical model is formulated, predictions are made, and the model is
validated (or revised) as additional data becomes available. For example, risk
models can be created to combine member information in complex ways with
demographic and lifestyle information from external sources to improve
underwriting accuracy. Predictive models analyze past performance to assess
how likely a customer is to exhibit a specific behavior in the future. This
category also encompasses models that seek out subtle data patterns to
answer questions about customer performance, such as fraud detection
models. Predictive models often perform calculations during live transactions
for example, to evaluate the risk or opportunity of a given customer or
transaction to guide a decision. If health insurers could accurately predict
secular trends (for example, utilization), premiums would be set appropriately,
profit targets would be met with more consistency, and health insurers would
be more competitive in the marketplace.

Predictive modeling is a process used in predictive analytics to create a
statistical model of future behavior. Predictive analytics is the area of data
mining concerned with forecasting probabilities and trends.
A predictive model is made up of a number of predictors, which are variable
factors that are likely to influence future behavior or results. In marketing, for
example, a customer's gender, age, and purchase history might predict the
likelihood of a future sale.