201310 LexisNexis: P/C Claims - Innovating to Win

Claims Session 4
Innovating to Win
2013 Customer Advisory Meeting

THE NOLAN COMPANY

Presented to:

Presented by:
Dennis Sullivan
Chairman and CEO

Steven Callahan
Practice Director

September 18, 2013

Industry Faces Challenging Times
Life Insurance Ownership

Investments

PC Claims Severity

Regulation

Competition

Market Exits
Technological Advances

2

LexisNexis® 2013 CAM: Innovating to Win

Combined Ratios Don’t Deliver The Same ROE
Combined Ratio / ROE
18%

15.9%

110

106.4

14.3%
12.7%

105
100

97.5

10.9%
101.0

100.6 100.1 100.8
9.6%

99.3

95.7

95

7.4%

92.7

8.8%

15%

100.9

100.0

7.6%

12%
9%

6.6%

4.4%
4.6%

90

6%
3%

85
80

A combined ratio of
~100 generated an
ROE of ~
16% in 1979
10% in 2005
7.5% in 2009/2010
6.6% in 2012

0%
1978

1979

2003

2005

2006

2007

Combined Ratio

2008

2009

2010

2011 2012:9M

ROE*

Combined Ratios Have to be Lower in Today’s
Investment Environment to Generate Same ROEs
Source: Insurance Information Institute from A.M. Best and ISO data.
3


Auto Claims Trends Indicative of Challenges
• Average Paid Repairable Severity Trend from 2006 – 2012:
Ø
Ø

Collisions Claims: $2,900 to $3,000 (increase started 2011, trend at $3,189)
Comp Claims (Excl. Glass): $2,250 to over $3,000

• Claim Frequency:
Ø
Ø

Collision claim frequency up 17.6% since 2006
Comp claim frequency up 17% since 2005

• Medical Cost Inflation:
Ø

2002 to 2012 U.S. inflation increased 28%, medical inflation increased 46%

• Distracted Driving Behavior – Impact on Frequency and Severity:
Ø
Ø

Contributes to 16% of fatal crashes, 5000 fatalities/year (11 teen deaths/day)
Texting causes 25% of car accidents; 600,000/year with 330,000 injuries/year

Note: The two technologies for the potential biggest reduction in crashes are
adaptive headlights and collision avoidance systems if perfected (NTSB).
4


Increasing Customer Service Complexity
Broader Generational Diversity Increasing Service Complexity
The Digital Generations
Five Generations of Consumers, consumers Wave Coming
- powerful Large New
(% of Total Population)

High Tech
Surge in Social Media Channels

5


Low Tech
Increasing Ethnic Diversity

Service Offers Opportunities for Significant Returns

Red = Lost Revenue / Customer Turnover
Yellow = Incremental Revenue, Existing Customers
Dark Blue = New Customer Revenue
Light Blue = Net Change in Revenue
Impact of CEM on Year
over Year Revenue
Change:
Strong Customer
Experience Management =
Improved Revenue

Net Up $84M

Average
Net Up $273M

Best-In-Class
6
6


Net Down $43M

Laggards

Driving Changes in Service Expectations and Strategies
Increasing Customer Expectations
• Immediacy / 24x7 access
• Transparency
• Personal service relationships
• Language differences
• Benchmarking performance within and outside the industry
Company’s Areas of Focus
Expanding Accessibility

100%

Accelerating Service Delivery

96%

Increasing Hours and Days of Service Availability

82%

Creating Different Levels of Customer Service

63%

Aligning Operations with Customer Markets

63%

7


Including an Evolving Service Delivery Model
One Size Fits All

Individualized Service

§ Same service for all segments

§ Segmented customer needs
and economic value

§ Over invest in some, under
invest in others

§ Investment in service aligned
with need/value tradeoff

§ One model to manage across
lines and customers

§ Service differentiation varies
by segment based on value

§ Differentiation at company level
based on brand or channel

§ More models to manage,
more challenging

§ Easier to match capabilities,
one target to work with

§ Delivery is people based,
harder to replicate

8


And Greatly Empowered Customers
Tens of thousands of positive
service touchpoints
a day, and yet one bad
interaction…

Today’s Customer
9


And suddenly your company is
at the top of the tweets list
telling thousands followed
quickly by a Facebook “Unlike”
Fan Page.

Surveys Indicate 4 Key Objectives for 2013
2013 Claims Objectives
(low #=top priority)
Reduce loss costs

1.88

Reduce LAE

2.18

Improve claim reserves

2.93

Improve customer service
0.00

3.01
0.50

1.00

1.50

2.00

2.50

3.00

3.50

Typical strategies to address these objectives
• Indemnity
•
•
•
•
•
10

• LAE

Leakage reviews
File reviews (open & closed)
Redefine supervisor role
Process redesign
Predictive modeling


•
•
•
•
•
•

• Customer
Reengineering/TQM
Spans of control
Sourcing rationalization
STP
Lean Six Sigma
BPO

•
•
•

Contact center redesign
Satisfaction surveys
Customer involvement

With Technological Challenges
• Claims Systems (Claims Executive Survey):

11


And Immediate Technological Investment Not Apparent
Yet Claims systems still a lower priority in actual funded initiatives

12


Industry Data Supports Budgets Constraining Solutions

4% less increasing,
BUT 39% increasing
Yes, 4% more
decreasing

Interestingly, 3%
more uncertainty,
most coming from
the “Remain the
same” responses

13


Even When Funded Implementation is Complex
Technology initiatives continue to face challenges according to survey

$

-

5 of top 6 challenges are people issues (availability, expertise)
The other one is budget, the place where people needs solved
14


And Alignment of Needs with Approved Initiatives Mixed
Process / workflow

2.47

New technology (all types)

Claims Will Be
Most Improved By
(low #=top priority)

3.50

Effective claim audits

•
•
•

3.75

Improved litigation mgmnt

4.58

? Increase SIU resources

6.67
0.00

1.00

2.00

3.00

4.00

5.00

6.00

Claim Analytics

7.00

8.00

Claims Initiatives
(high #=top priority)

52.4%

Litigation Mgmnt

52.4%

•
•
•

40.5%

SIU Effectiveness
New Claims System

28.6%

Mobile Technology
15

27.4%


Efficiency
Technology
Audits

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

Analytics
Litigation Mgmnt
SIU Effectiveness

“Innovating to Win” Requires Focused Achievability
Even with all the amazing options, the foundation must be solid:
1. Claims Processing Systems Built on Best Practices
‒
‒
‒

Modular replacement if necessary; stepwise, wrap, LOB, or Bang
Integrated and adaptable business rules, distributable (n-tier)
Data adaptability, integrity/quality and accessibility

2. Ubiquitous Multi-faceted Analytics
―
―
―

Straddle claims + underwriting + pricing + servicing + external data
Integrated: FNOL, Adjusting, Subrogation, SIU, Recovery, Litigation
From workflow to predictive modeling, key to loss management

3. Empowered Remote Capabilities
―
―

16

Customer apps for point of claim FNOL data capture, mobile service
Adjuster toolsets: aerial imaging, photo capture, portable rules base, client
access, GPS routing & tagging, real-time connectivity


1. Claims Operations Best Practices
Resource Management

•
•
•
•
•
•

17

Staffing Skillset Models
SIU Staffing analysis
Productivity Reporting
Workforce Utilization Management
Structured Change Management Methodology
Formalized Communication Plans


Process Workflow

•
•
•
•
•

Claim service model design
Optimized organizational structure
Process workflow analysis / automation tools
Claim Unit process interdependence/Interaction maps
Claim cycle time minimization
– Inspection to-repairs-to-settlement cycle time
– Substitute rental vehicle cycle time & control

18


Financial Analysis

• LAE expense analysis & trending:
• Loss cost analysis & trending:
―
―
―
―
―

Averages / Trends
Paid claims, recoveries, leakage
Review of vehicle total loss process
Direct repair facility evaluation
Reinspection process and impact

• Reserve management:
―
―
―

19

Averages / Trends
Redundancy / Deficiency
Methodology Review


Operations and Service

•
•
•
•
•

20

Litigation management view
Recovery management view
Internal quality control process
Claim manuals / guidelines
Fraud impact / SIU effectiveness tracking


Vendor Management

§
§
§
§
§
§
§

21

Legal Cost Management Process & Tools
Independent Adjusters & Appraisers
Medical Cost Containment Providers
Medical Bill Review Vendors
Damage Appraisal Software Vendors
Glass Vendors
Direct Repair Facilities


Litigation Management

•
•
•
•
•
•
•
•

22

Litigation claim file review (sampling)
Litigation management program review and analysis
Litigation unit staffing / productivity analysis
Legal cost containment process review
Suit Log process and effectiveness
Analysis of suit volume vs. results
Pre-suit avoidance techniques
Utilization of Alternative Dispute Resolution (ADR)


Analytics Contribute Throughout The Process
SIU

FNOL

Assign
Claim

Evaluate
Claim
Fast Track Claim

Negotiate
Services

23


Initiate
Settlement

Update
Claim

Close
Claim

First integrate the automated consolidation of information

External

Consoldtd
Accident
Records

Compiled
Social
Data

Specialized
Contributed
Data

FNOL

Internal

24


U/W
Info

Key
Srvce
Info

Assign
Claim

Prior
Claim
Info

Analytics Starts Workflow: Identify, Segment, Prioritize
Optimized Claims Adjudication process.
§ Using data mining to cluster and group claims by loss characteristics (such as
loss type, location and time of loss, etc.).
§ Claims scored, prioritized and assigned per experience and loss type.
§ Higher quality, more consistent, and faster claims handling.

Adjuster Effectiveness Measurement.
§ Adjusters typically evaluated based on an open/closed claims ratio.
§ Analytics for key performance indicator (KPI) reports of customer satisfaction,
overridden settlements and other relevant metrics.

Claims involving attorneys = 2X settlement and expenses.
§ Analytics to determine which claims are likely to result in litigation.
§ Assign to senior adjusters to settle sooner and for lower amounts.

25


Faster Processing: Lower Costs + Happier Customers
Analytics help shorten the claims cycle times.
§
§
§

Claims cost 40% more if FNOL is delayed by 4 days.
Auto accidents take average of 16.2 days to repair and return.
Significant expense savings on rental cars, etc. for auto repairs.

37%

Satisfaction going down
CSI of 854 to 828 to 772

27%

36%

JD Power, 2007

1 wk or less

8-14 2007
JD Power, days

Over 2 wks

Analytics drive higher Customer Satisfaction and Lower Costs
26


Overall CSI Index

% of Claimants

Duration and Customer Satisfaction are directly correlated.
854
828
772

Subrogation Recovery Time Sensitive, yet often Secondary

Recovery Rate

Std / Pref
Non Std

Referral Days

15% of claims closed with a missed subrogation opportunity
• How many collisions are paid with no PD payment and no referral to
subrogation?
• Monthly reviews of files closed with no recovery potential identified can yield
significant returns
27


Subrogation Represents Immediate Impact

Subrogation can be a missed opportunity at several
points since it is usually not treated as a priority in claims
payment metrics, often falling off radar post payment
28


Identifying Claims Fraud: A Tremendous Opportunity
• About 10% of all insurance claims are fraudulent. Annual fraud losses
for P&C industry total $30B in US alone
$80
‒
‒
‒

Detect unknown patterns of fraud.
Keep track of new fraud schemes.
Unsure exactly what to look for.

$61 $64 $69

$74

e2013 e2014 e2015

Rules: Captures fraud on known patterns previously used
Ex: Two claims in different time zones within short window
Anomaly Detection: Detect unknown patterns (ind & aggr)
Ex: Statistics (mean, std dev, uni/multivariates, regression)
Advanced Analytics: Detect complex patterns
Ex: Knowledge discovery, data mining, predictive assessment
Social Network Analytics: Determine associative links
Ex: Knowledge discovery via associative link analysis (entity map)
SAS Institute
29



Prioritized investigation
Focus on organized fraud
Minimize claim padding
Reduce false positives

Fraud
Referrals

Fraud
Referrals
FNOL

Assign
Claim

Re-estimate duration
Reassess loss reserving
Prioritize resources
Fraudulent rescoring
Review litigation propensity

SIU

Evaluate
Claim
Fast Track Claim

Predict duration
Forecast loss reserves
Optimize fast track claims
Prioritize resources
Fraudulent scoring
Litigation propensity
30

30


Negotiate
Services
Initiate
Settlement

Update
Claim

Close
Claim

Cross-sell options for
satisfied customer
Customer retention program

Identify salvage and subrogation
opportunities
Indicate deviations from similar
claims
Reports on claims overrides

Common Barriers to Using Analytics

31

31


Guidelines to Implementing Analytics
All-executive panel agreed on three guiding principles:
1. Have an executive sponsored roadmap that clearly outlines.
§
What resources will be needed for how long,
§
Where and when predictive analytics will be used,
§
Which tools will be used, and
§
How will success be measured.
2. Use data that is comprehensive, accurate, and current.
§
Not necessarily 100%, some have used only 70%. Must be representative.
3. Staff with talented and engaged people.
§
Completely understand business problem and are proficient with analytics.
§
Every person does not have to meet both qualifications; a team can be used
with some experts on the business and others experts on analytics.

32



33



By leveraging the results of predictive analytics…Some
industry experts indicate they can attain 5 to 12 percent
improvement in loss costs and up to an additional 3 to 7
percent improvement in claim leakage.
34



35



36



37



38



39



40



41


Enhanced Remote Capabilities
• Cloud based web tools allow remote collaboration
―

Cat and FNOL are proving areas facilitated by cloud based apps

―

SharePoint, Office365 and Lync Online enable real-time interaction

―

Integrating GPS, Google Earth and similar apps with local
presence has enhanced claim reporting and reduced cost
of detail data

―

Direct connection to Home Office staff and systems puts
full power of office systems in the field

• Two-pronged strategy: first empowered clients
―
―

Add ability to request nearest contracted tow service & line up a rental car,
result delivers service excellence and operational efficiency

―

The cost and effort required to put this type of app in
place is less than imagined.

―
42

Leverage mobile technology to create local presence reporting

Numerous examples of FNOL Apps exist today for clients
who can choose to build one, like Allstate & AIG

Adjuster Toolkits: Accelerating Critical Service

• Adjusters (and inspectors for UW) benefit from remote toolsets
connected to the cloud and home office
―

―

On client, street level views, coverage history, claims data, financial info, loss
details, incident histories, red flag indicators, contact info

―

Collection, submission, video review and determination possible on the spot,
even payout depending on available equipment (mobile deposits)

―

Accelerates FNOL, improves accuracy and timeliness, reduces field
adjustment burden, reduces data entry, collection and indexing

―

43

GPS mapping, aerial inspections when needed, real-time photo of accident
scene, video for teleconference, preloaded rules for assessment

Add ability to request nearest contracted tow service
and line up a rental car, and the result delivers on
both the service excellence and operational efficiency
goals set out at the beginning.


A Day in the Life of an Adjuster
• Adjuster receives claim notification via email and an alert including
contact information.
Direct to field process enables impressive, quick response to claims.

―

• A call is made, appointment set, maps accessed and the GPS navigator
engaged.
―

Upon arrival, accident scene and damage photos are taken, key party info all
fed directly back to the home office claims system.

―

One of several estimating tools is accessed
•
•

―

Diagramming automated using laser measurements and square foot calculators
Depreciation allowances, location mapping and statements of loss created.

Aerial imaging incorporates birds eye view into the claim data
•

•

Same aerial images available from home or regional claims centers to confirm collected
information or determine any need for manual refinements.
Historical pre-damage views might also be available for comparative purpose

• These services are available today on laptops transitioning to pad or
phone apps moves to more convenient level.
44


Specialty Lines Apps Arising
• Award winning for racehorses
―

―

includes the ability to search out
the nearest qualified vet

―

provides contact information and
a map from current location

―


submits FNOL information when
a covered race horse is injured

―

45

assists in determining coverage
applicability and levels

only cost the carrier $25,000 to
develop

Special Weather Apps to Assist in Adjusting Claims

• Newly released HailSpot to capture immediate hail data
―
―

geo-locates exact address mapped to weather history for spot

―

helps prevent paying for pre-existing damage based on exact dates

―
46

enter location and DOL, get up to 10 years of hail size and duration

combined with rules base, recommends replace, repair or deny


Industry Innovations Rising to Meet New Challenges
Technology Climate Corp. Updates
Crop Insurance via High Tech
By Ashlee Vance March 22, 2012

47


Staffed by an army of data scientists,
the company is bringing data analytics
to rural America and helping farmers
reap more consistent profits from their
fields. It’s an example of how cloud
computing, modeling, and other
technologies that have reshaped the
Web and business are now
revolutionizing more traditional
industries. “Software is going to
fundamentally change how the world
operates,” says David Friedberg,
Climate’s chief executive officer and
co-founder.

Industry Innovations Rising to Meet New Challenges
Crash Avoidance Technologies
Reducing Accidents, Saving Lives
New study shows “clear success” of
collision warning, auto braking,
adaptive lighting systems.
by Paul A. Eisenstein on Jul.03, 2012

48



49



50



51



52



53



54



55



56


Apps Proliferating Across LOB’s and Functions
Workers Compensation app
Construction estimating app
Home inspectors app

Property inspection app

57


USAA Auto insurance app

Mobility Strategies: Have A Framework for Mobile Solutions
The organization’s mobile computing strategies must be developed for:
Audience:
Who will use the mobile
device capabilities?
• Drives Design Alternatives
• Drives Deployment options
• Employees, Business Partners,
Providers, Customers, general
public

Devices:
Target devices and
device ownership?

Data Security:
What data will they have
access to?

• Drives Security Requirements
• Drives Deployment options

• Drives Security Requirements
• Drives Architectural Solutions

• Company provided

• Current application data?
Historic Data?

• End user provided – devices
specified by company

• Policy / Claim History Information

• Technical features may vary by
audience (Email, device wipe,
device profile ,MDM software)

• End user provided – device
independence

• Data Sensitivity : payment and
health information (PHI,HIPAA),
PCI)

Each different user group will
require different security controls
and access

BYO – Bring your own – requires
significantly more robust
availability

Must have the capability to secure
and remove data in case of device
loss

58


58

Mobility Management: Use Framework to Control Execution
Idea for
Mobile App

High
Level
Reqmts

STEP I

STEP II

Business Case

Select from
Library of Usage
Patterns

• Project is submitted via
the IT prioritization
process
• CBAs validate
• Business case is made
to deploy via mobile
devices
• Project is approved,
prioritized & scheduled

•
•
•
•

Audience Served (user)
Device Ownership
Supported Devices
Information Security
(where is the data
stored)

Deliverable
Vision & Scope

59

STEP III

Evaluate
Functional Fit
Consumer

No PCI/PHI

My PCI/PHI

Android

Mobile
App

Mobile
Web
Public Store

Android

Application

Deliverable
High Level
Architectural
Framework


Multiple PCI/PHI

Virtual App

Internal Store

Push

Mobile
Application
Deployment &
Support Model

Mobile Browser
Desktop
Web

Pull

Non-Resident

Citrix*

Web

Device

2 OS/ 3 App

• Schemas are standard
patterns used to guide
mobile development
choices based on the
business case

Mobile
Policies &
Standards

Tablet

iPhone/iPad

Support
Level

Build Plan

3rd Party or Personally Owned

Smart Phone

iStore

STEP IV

3rd
Party/Partner

Associate

Company-Owned

Additional Considerations
to address as part of the
business case are:

Low
Level
Reqmts

2 OS/ 2 App

• Evaluate form factor (smart
phone or tablet)
• Identify security or
functional requirements
that are non-standard
• Evaluate deployment
model for usability (e.g.
mobile web, resident app)

Deliverable
Framework
tailored to opportunity

Client SDLC
59

Security
Review

1 OS/ 1 App

Device Testing
Needs
•

Mobile Specific build,
deploy, and support
needs for the finalized
schema

Deliverables
Client Standard
SDLC Artifacts

Production
Mobile App

Challenges: Why companies aren’t using analytics.
Issues

Other Underlying Challenges

• Typically at the C-Level

• Visibility

• Building the case –

• Getting the buy-in across many areas
• Noise / too many corporate priorities

Ø

Cost / Funding / Competing Priorities

• Resource constraints

• Technology programs outside of these
effort which are taking up resources

• Access and quality of data

• Sources
• Silos
• Insufficient

What are your specific challenges?
60


Avoid Analysis Paralysis

61


Strategies being deployed
• Building the case
Ø

Incremental vs. “Big Bang”

Ø

Addressing resource constraints (third-party sourcing with internal buy-in

Ø

Overcoming the serial approach (Distribution, Products, Administration, then
Claims) – 80% of the costs are in claims

Ø

Incremental approach to integration issues, current architecture

• Cost / Benefit / Funding
Ø

Incremental approaches (Pilot efforts)

Ø

Pay as you go

Ø

Measure early results

• When getting the pushback
Ø

62

Use your own data and apply the analytics to demonstrate benefits


Have a plan to manage change!
Levels

Change Process

“Engage the
Top and
Lead the
Change”

Make the case for change
Build the leadership team
Craft the vision
Set the direction

“Cascade
Down and
Break
Barriers”

v
v
v
v

Pick the change leaders
Create cross-functional teams
Embrace new ideas
Empower the change leaders

“Mobilize the
Base and
Create
Ownership”

63

v
v
v
v

v
v
v
v

Roll-out a change program as a base
Train the trainers
Change key processes
Measure the change


Key Strategies for the Future
• Education: Your organization needs to know what it means to become
data driven and customer focused.
• Differentiate service with measurable data.
• Expand and capitalize on your customer relationships.
• Technology investments need to show new revenues and reduce
expenses.
• Break down management silos to become responsive to the market –
Team Approach.

64


Questions?

If Not:
Thank you for your time.
Enjoy the rest of the conference and have a safe trip home.

Dennis Sullivan
Chairman and CEO
www.renolan.com
The Nolan Company
dennis_sullivan@renolan.com
65


Steven Callahan
Practice Director
The Nolan Company
steve_callahan@renolan.com

201310 LexisNexis: P/C Claims - Innovating to Win

Recomendados

Recomendados

Más contenido relacionado

La actualidad más candente

La actualidad más candente (19)

Similar a 201310 LexisNexis: P/C Claims - Innovating to Win

Similar a 201310 LexisNexis: P/C Claims - Innovating to Win (20)

Más de Steven Callahan

Más de Steven Callahan (20)

Último

Último (20)

201310 LexisNexis: P/C Claims - Innovating to Win