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October 2014
Bold Claims: Unlocking the Potential in Predictive Analytics
Steve Callahan, Practice Director

SMC Big data is now ubiquitous in the insurance industry, but most insurers are merely scratching the surface when it comes to effectively harnessing its value. In fact, a recent study revealed that 60% of claims data is still unstructured, and that 16% of high-risk claims are still neglected. In addition, about a third of those polled are developing a strategy for dealing with their data, but only 9% have actually launched a formal program. It's clear that not only effective metrics, but also effective analytics are essential for identifying opportunities and threats - and for driving the right performance improvements in the organization. In other words, insurers must exploit data in order to maximize performance.

Predictive analytics involves looking for patterns and trends in claims data that can foreshadow issues and outcomes - so leaders can take action with the appropriate people, processes, and technology. Many insurers are already using analytics to help with fraud prevention. But in our experience, fraud is merely the tip of the iceberg. Predictive analytics has the potential to affect many other areas within the claims organization, including (but not limited to) loss triage, recovery, specialized interventions throughout the claim life cycle, case reserving, and claim evaluation. In fact, predictive analytics can do as much or even more in these areas as it can for fraud prevention. And while the focus of this article is on analytics within the claims function, Nolan believes predictive analytics can also drive significant business improvement in such areas as underwriting and actuarial interventions. In other words, there's still a lot of value to be realized in the proper application of big data.

Predictable Impact

Here are some of the most compelling ways that predictive analytics can transform your claims organization:

  1. Litigation Avoidance: Certain characteristics of past claims are powerful indicators in predicting whether a current claimant will retain an attorney or pursue litigation. When analytics identifies this subset of claims, specialists can flag them early and apply advanced rapport techniques or other interventions to help minimize severity.
  2. Case Reserving: By examining the obvious and not-so-obvious data values and key correlations, claims experts can spot case reserve issues that are likely to develop. This facilitates more targeted reviewing, and can even help organizations develop procedures for automated escalations.  
  3. Severity Interventions: By recognizing claims that exhibit signs of severity inflation (legitimate or otherwise), you can respond sooner with the appropriate interventions - whether it's a medical review, expert review, enhanced case management, internal review, fraud referral, or something else depending on the situation.

...plus 5 others, and specific actions you can take to move from data to decisions.  Read the full article here.

  

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LIMRA Annual Conference

October 26-28, 2014   ∣  New York, NY

 
Nolan is a sponsor of the 2014 LIMRA Annual Conference in New York. Nolan's Executive Vice President, Steve Discher and Senior Vice President, Ed Fenwick will be onsite at this year's conference.


AHIP Operations and Technology Forum

November 17-19, 2014   ∣  Phoenix, AZ

 

Nolan is a sponsor of the 2014 AHIP Ops/Tech Forum in Phoenix. Nolan Practice Director, Gerald Shields will be speaking on the topic of

Effectiveness versus Efficiency: Getting True Business Impact from IT on Tuesday, November 18 from 2:45pm - 3:30pm.
ClaimsHCClaims Health Check: The Nolan Approach

 

At a time when insurance organizations are faced with increasing costs,dwindling reserve redundancy releases, and historically low interest rates on investments, every dollar counts toward the bottom line. And, while it's true that the claim department is not a profit center, it's important to remember that these operations typically account for an estimated 55-60 percent of overall gross written premiums. It's critical for insurance providers to keep a tight rein on claim management costs today, while laying the groundwork for a rapidly changing technological landscape.

 

In order to manage your claim operations most effectively, it's important to start with a clear picture of the resources, processes, and technologies already in place. The Nolan Claim Health Check brings these elements into view, then provides clear solutions to help you achieve:

  • An estimated savings of 2-4 percent off your combined ratio
  • Improved claim cycle time and adjuster productivity
  • Enhanced efficiency and customer service

To learn more about our approach, click here  
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