Power numbers … the math-link between baseball and insurance

Nov 24th, 2015

Our STEM Progress® team is teaching students how advanced stats can reveal hidden truths in everything from baseball to car insurance

Growing up a baseball fan in the 1980s, I got caught up in a golden age of baseball card collecting. I’d open the wax packaging, cram the so-called gum in my mouth (it was terrible, but I chewed it anyway), and analyze the following stat line for a hitter: batting average, home runs, and RBIs. With just three numbers, I thought I knew that hitter’s story. And so did players, coaches, scouts, and just about everyone else interested in baseball. But it was actually only part of the story.

How math changed baseball forever

Today, baseball stats paint a more complete picture. OPS, WAR, VORP, and other advanced statistics known as sabermetrics (for the Society for American Baseball Research, or “SABR” for short) ushered in a new way of thinking about a player’s true performance. In fact, SABR’s work proved so revolutionary that it formed the basis for Michael Lewis’ popular book “Moneyball,” which was later made into an Oscar®-nominated movie starring Brad Pitt.

So how do the advanced stats help decision-makers more than the traditional ones? Take the sabermetric OPS, or On-base Plus Slugging (the sum of a player’s on-base and slugging percentages). “Sabermetricians” found that the combination of how often a player can get on base and hit for power can better show all of that hitter’s offensive skills (that is, the ability to make contact, draw walks, and hit for power) than, say, batting average alone, which only speaks to the ability to hit. OPS, then, yields more information, which can help the team make better decisions about which players should play, where they fit in the batting order, and more.

Bringing together baseball, insurance and classrooms

In a similar way, Progressive is on the forefront of a sabermetric-like revolution in car insurance. And while we’re using new data to help find the most accurate rate possible for our customers (more about that below), we’re also using it as an opportunity to help Cleveland-area students develop their STEM (science, technology, engineering and math) skills.

To wit, we’ve partnered with Cleveland State University and the Cleveland Indians to introduce sabermetrics into the classroom. Using both baseball and car insurance scenarios, we’re demonstrating how the real world applications of advanced statistical analysis can help people make better decisions.

For example, while traditional information still plays an important role in calculating the right price for car insurance (think vehicle year, make and model, number of accidents, number of violations, etc.), we’re showing students how new information gathered through our Snapshot® usage-based insurance program is shedding more light on what truly makes up an accurate rate.

Looking anew at car insurance

Like the baseball scouts in Moneyball, we’ve had to adjust our thinking to take into account new stats that have proven to be powerful predictors of claims. For example, based on our review of Snapshot data, we know you’re more likely to have a claim if you consistently drive at certain times.

How do we know? With Snapshot, we’ve been able to watch trends and patterns develop based on actual driving behavior, not reported behavior. So we’ve been able to see when claims happen. Just like sabermetrics reveal more about a player’s performance, this driving behavior data exposes which factors can lead to an accident. And when you know what can lead to claims, you can use that knowledge to calculate accurate rates, educate drivers on how to reduce their risk, and more.

Will our usage-based insurance team’s revolutionary insights wind up in a best-selling book or movie someday? Well, we’re still waiting for Brad Pitt to call, but we’re confident those insights will wind up in our schools as we work to champion STEM concepts like this with students of all ages.

Wanted: interested teachers

If you’re a teacher or educational professional interested in learning more about our STEM offerings, email us or leave a comment below. We’ll be happy to connect with you.

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