Claim Analytics.pptx %5bRead-Only%5d (1)
- 1. How Does Your Claim Department Measure Up?
- 2. www.theclm.org Measuring Your Workers Compensation Claims Department Using Data and Predictive Analytics C. Michael Mattix, J.D., CPCU, ARe Vice President, Claims and General Counsel Armed Forces Insurance Steven R. Henning, MBA, CPCU, Are Vice President, Business Risk Review Swiss Reinsurance How Does Your Claim Department Measure Up?
- 3. www.theclm.org • Workers compensation claims • Top 15 states • Benchmarking exercise • Audit of claim files – consistency • Reserving: Analyze changes last 2 years • Recommendations for improvement • Follow-up to measure improvement Project Scope
- 4. www.theclm.org • Review of all relevant contracts, procedures and policies • Interviews with members of senior management • Audit of over 800 open lost time claims • Multivariate Analysis of all WC transaction data from 1994 Project Methodology
- 5. www.theclm.org • Analyzed company data against known industry benchmarking data: Workers Compensation: » NCCI » WCRI NOTE: USER BEWARE! You must be a member of these organizations in order to use their data. Even then, it is advisable to ask for permission to use in a benchmarking exercise. Benchmark Comparisons
- 6. www.theclm.org 2009/2010 claims Average Incurred Benefits More then 7 days lost time © WCRI 2012. All rights reserved
- 7. www.theclm.org What’s causing your pain? Performance Metrics
- 8. www.theclm.org Median and Average Open Case Reserves - 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 - 200 400 600 800 1,000 1,200 1,400 1,600 1,800 #Claims Median $Case Reserve Avg $Case Reserve #Claims
- 9. www.theclm.org Non-Initial Indemnity Reserves Changes $6,000 $7,353 $9,850 $9,000 $7,810 $8,023 $11,600 $10,915 $11,320 $12,500 $19,768 $5,000 $10,000 $15,000 $20,000 $25,000 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
- 10. www.theclm.org Open Case Reserves California Only $0 $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 1993 1994 1995 1997 1998 1999 2000 2001 2002 2003 2004 State CA $Case Reserve @YearEnd PolEffYY
- 11. www.theclm.org Open Case Reserves California v. All Other $0 $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 $7,000,000 $8,000,000 $9,000,000 $10,000,000 CA NonCA CA NonCA CA NonCA CA NonCA 2001 2002 2003 2004 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 State (All) Before2001 2001-2004 $Case Reserve @YearEnd CAvsNonCA PolEffYY
- 12. www.theclm.org New vs. Renewal Business 0 2,000,000 4,000,000 6,000,000 8,000,000 10,000,000 12,000,000 14,000,000 16,000,000 18,000,000 1999 2000 2001 2002 2003 2004 New account in 2001+ OldAccount LTclaim (All) Open (All) CAvsNonCA (All) State (All) Renewal (All) Loss Exp OS PolEffYY Account Age
- 13. www.theclm.org New vs. Renewal California Only 0 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 1999 2000 2001 2002 2003 2004 New account in 2001+ OldAccount LTclaim (All) Open (All) CAvsNonCA CA State (All) Renewal (All) Loss Exp OS PolEffYY Account Age
- 14. www.theclm.org Expense to Loss Ratio 0.00 0.02 0.04 0.06 0.08 0.10 0.12 0.14 0.16 12 24 36 48 60 72 84 96 1997 1998 1999 2000 2001 2002 2003 2004 PaidExpense (All) ExpenseToLoss @ AccYY
- 15. www.theclm.org Indemnity to Medical Ratio 0.00 0.10 0.20 0.30 0.40 0.50 0.60 0.70 0.80 0.90 12 24 36 48 60 72 84 96 1997 1998 1999 2000 2001 2002 2003 2004 IssuedDateMax (All) IndToMed @ AccYY
- 16. www.theclm.org Claim Review Data Collection Categories Data Integrity Initial Investigation Claim Handling & Settlement Expense Management
- 17. www.theclm.org Date of Loss Correct from First Report of Injury Yes 82% No 18%
- 18. www.theclm.org Date of Report Correct Date stamp (mail, fax, email, call log) in claim file Yes 41% No 59%
- 19. www.theclm.org DATA INTEGRITY Suggested Procedural Changes Clear operational definitions • Stress importance of data integrity Clear, unambiguous message Duty of every employee Map from policy/claims system • Performance metrics Adjuster responsible Part of performance evaluation
- 20. www.theclm.org Re-opened Claims 0 500 1,000 1,500 2,000 2,500 3,000 3,500 0 1 2 3 4 5 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Open (All) #Claims CL_TIMES_CLOSED DOIYY
- 21. www.theclm.org Closed Lost-Time Claims $1,708 $4,180 1,866 362 0 1,000 2,000 3,000 4,000 5,000 No ReOpen ReOpen Median #Claims
- 22. www.theclm.org Closed Lost Time Claims $1,708 $4,180 $3,601 $23,399 1,866 1,702 164 362 0 5,000 10,000 15,000 20,000 25,000 No ReOpen ReOpen ReOpen - No Lawsuit ReOpen - Lawsuit Median #Claims
- 23. www.theclm.org Multivariate Analysis Multivariate analysis (MVA) is based on the statistical principle of multivariate statistics, which involves observation and analysis of more than one statistical variable at a time. In design and analysis, the technique is used to perform trade studies across multiple dimensions while taking into account the effects of all variables on the responses of interest.
- 24. www.theclm.org Multivariate Analysis What did our analysis uncover? Reserving Issue: Claims involving female workers were under reserved by 12% Severity: 3 occupational codes were driving the severity
- 25. www.theclm.org Multivariate Analysis Why is this important?
- 26. www.theclm.org Innovators and entrepreneurs well into implementation Focus on WC, GL and Auto BI Targeted at high/low cost claimants, including those involving fraud, litigation and subrogation Broad interest by primary insurers, TPAs and large self insureds (No reinsurers!) Predictive models built custom to the organization Standard practice in leading companies Seamlessly integrated with business rules and system automation to drive results Early adopters leverage capability to gain market share Pay-as-you-go type of predictive models that leverage common IT structure TODAY 2014 and BEYOND Industry assesses value of predictive modeling Innovators launch technology Slow movers scramble to catch up Leaders achieve competitive advantage PREDICTIVE ANALYTICS
- 27. www.theclm.org Predictive Analytics Focus on the “Vital Few” 0 5 10 15 20 25 30 35 40 45 50 1 2 3 4 5 6 7 8 9 10 0.25 0.5 1 1.75 2.5 3 4 7 30 50 PercentageofTotalIncurredLosses Decile Predictive analytics allow you to focus additional resources on those 20% of claims responsible for 80% of total payments
- 28. www.theclm.org Performance Analytics • Audit Sampling Considerations • Primary claim file review – Sample Size Criteria (population size, confidence level, desired precision) – Open/Closed (depends on issue reviewed) – Size of Claim (segmented into large, medium, small) – By Line of Business – By Adjuster/Supervisor/Branch Office – Occurrence dates (weighted > 2007)
- 29. www.theclm.org Performance Analytics • All audit questions are objective (answers are "Yes", "No" or "N/A") • Broad range of adjuster behaviors measured, focused on each phase of a well-managed workers compensation file – Coverage - Initial Investigation – File Management - Reserving – Recovery - Vendor Management – Return to Work - Resolution • Operational Definitions are specific, measurable, actionable, realistic and time-oriented
- 30. www.theclm.org Three Point Contact 3 days 3% Late 13% None 84%
- 31. www.theclm.org Claim Reporting Lag Time from DOL to DOR 0-3 26% 4-7 18% 8-14 16% 15-30 15% More than 30 25%
- 32. www.theclm.org Accident Verification Meaningful Contact with Employer and Employee Yes 60% No 40%
- 33. www.theclm.org Witnesses Contact/interview with identified witnesses Yes 33% No 67%
- 35. www.theclm.org ISO Filing Initial filing within 10 days and appropriate refilings Yes 58% No 42%
- 36. www.theclm.org Initial Investigation Suggested Procedural Changes Loss Intake Process: Importance of the First Few Days Improved Data Integrity Ensure requisite documents are available for claim handling Establish rapport with injured worker Establish clear factual basis of loss Obtain clear plan of treatment from treating physicians
- 37. www.theclm.org Initial Investigation Suggested Procedural Changes Three-Point Contact Witness Contact/Statements ISO filings Accident Verification Mandatory Clear Operational Definitions Performance Metrics Documentation
- 38. www.theclm.org Claim Management Suggested Procedural Changes Medical records Request treatment plans/outcomes Surveillance Clear assignment (physical manifestation of injury, physical description/photo) Limit number of hours/days of assignment
- 39. www.theclm.org Claim Management Suggested Procedural Changes IMEs Clear assignment: Send complete medical records, claim notes, surveillance results, pleadings, depositions, etc. Ask specific questions about causation and treatment (modalities and frequency), etc. Keep the end in mind (i.e., what is the goal of performing the IME?)
- 40. www.theclm.org Claim Management Suggested Procedural Changes Action Plan in file Action plan completed by adjuster no later than 60 days from assignment Contains specific actions, dates and actors Supervisor Notes Timing -- regular cadence (e.g., 30, 60, 120, etc.) Specific file direction/action
- 41. www.theclm.org Claim Management Suggested Procedural Changes Reserves Use reserve worksheet – document changes Set timely; reviewed timely Consider using statistical reserves for 90 days Place medical reserves on files with PTD or lifetime medical exposure Review underlying assumptions annually Consistent with Company Philosophy Clear operational definition Changed circumstances Audits
- 42. www.theclm.org Claim Management Suggested Procedural Changes Expense Management Legal Assignment Legal Expenses Medical Case Management Assignment Medical Case Management Expenses Vocational Rehabilitation Assignment Vocational Rehabilitation Expenses Claim Handler Maintaining Control
- 43. www.theclm.org Organizational Recommendation Claim Intake Unit Large Loss Unit Settlement Specialist Supervisors are strictly administrative Claim Committee (Formal and informal)
- 44. www.theclm.org Questions Thank you for the opportunity to discuss this exciting topic. We are glad to respond to any questions you may have.
- 45. www.theclm.org Legal Notice • ©2012 Armed Forces Insurance and Swiss Re. All rights reserved. • You are not permitted to create any modifications or derivatives of this presentation or to use it for commercial or other public purposes without the prior written permission of Armed Forces Insurance and Swiss Re. • Although all the information used was taken from reliable sources, Armed Forces Insurance and Swiss Re do not accept any responsibility for the accuracy or comprehensiveness of the details given. All liability for the accuracy and completeness thereof or for any damage resulting from the use of the information contained in this presentation is expressly excluded. Under no circumstances shall Armed Forces Insurance, its affiliates or Swiss Re or its Group companies be liable for any financial and/or consequential loss relating to this presentation.