Sponsored: Liberty Mutual Insurance

The Importance of Claims Innovation for Insurance Buyers and Brokers

A dedicated team of professionals is just one of the key elements of an effective claims innovation program.
By: | December 14, 2015 • 5 min read

Innovation is dominating the headlines today, sounding more like a science-fiction novel than the news. Technology advances are making devices like infrared cameras and drones more accessible and enabling advancements in business processes that help reduce costs and improve customer service – all of which begs the question, ‘Can innovation help control cost in the commercial insurance industry?’

Liberty Mutual Insurance believes it can, and has invested in tools to help better manage general liability, property, commercial auto and workers’ compensation claims. The insurer has a dedicated team of data scientists and predictive analytics modelers, as well as a devoted innovation team whose full-time job is to explore how innovation can be used to improve service and reduce costs.

“It’s one thing to say you want to be a leader with analytics or innovation, but to make it a reality you must dedicate teams to data analytics, predictive modeling, and innovation,” said Glenn Shapiro, chief claims officer of Liberty Mutual’s commercial insurance operation. “With the rate that technology is changing, dedicating resources to innovation makes perfect sense. It provides the opportunity for us to think differently about our business and deliver clear benefits to buyers and brokers.”

Liberty Mutual’s Glenn Shapiro reviews the value of innovation for buyers and brokers.

Seeing is Believing

During an inspection of a commercial insurance water damage claim, a Liberty property adjuster wondered if an infrared camera would allow him to better understand and more accurately assess the extent of damage. And with that one question, Liberty’s innovation team set out to look into the technology and test it. As a result, infrared cameras were deployed into the field.

“One of the first test cases was a large gymnasium with water damage,” explained Shapiro. “Everyone who looked at it believed the entire floor needed to be replaced. But with the infrared camera, it was determined that actually only a quarter of the floor had water damage. Not only did this technology save considerable cost, but the customer was able to get back to business quicker with a less involved repair.”

Armed with portable infrared cameras, Liberty’s commercial property adjusters are able to examine the extent of damage, rather than ripping out walls, floors, and ceilings to find it—an expensive and time-consuming endeavor.

Another great example of Liberty’s innovation team reducing costs and improving service is in post-catastrophe situations. The most trying time for the insured and the insurance company is waiting for access to the catastrophe zone. In some cases, authorities won’t allow access for many weeks. So Liberty’s innovation team was tasked with ‘how can we gain access and assess damage sooner.’ Their answer: Drones.

Drones and satellite imagery allow the insurer to get an early view of the loss and quickly assess the rough scale of damage in order to make initial payments and deploy field claims resources. For the insured experiencing the loss, this quick action and movement towards recovery is a huge help in a very difficult time.

Glenn Shapiro highlights the value of drones and infrared cameras in better managing total claim costs.

Putting Data to Work

One of the benefits of technology is the ability to gather, analyze, and trend data. Many predictive analytics models have been developed to allow insurers to point to possible problems, but often in a very general way. Liberty’s predictive modeling team has taken this to a new level with laser models, allowing for a very specific action at a specific point in time.

Glenn summarizes the importance of predictive modeling in managing claim costs.

“I often explain this like the ‘check engine light’ on your car dashboard,” said Shapiro. “When this light comes on, it could be a range of different problems. But if it said ‘right front tire is low’ you would know immediately what needs attention.”

Liberty was the among the first Property & Casualty insurers to bring the sophisticated data analytics that are standard in Group Health insurance to workers’ compensation claims management. More recently, Liberty has developed several laser models for workers’ compensation claims that accurately identify cases in need of specific action. The insurer’s compensability model can identify cases with 90% accuracy that require deeper compensability review. Another model can identify potential fraud, and another can detect possible opportunities for subrogation recovery. Many other laser models are being developed to use data to focus in on specific issues faster.

The result of Liberty’s systematic focus on claims innovation helps better control the total cost of claims. In fact, Liberty Mutual/Helmsman closes workers’ compensation claims 20% faster than other insurers, and its 10-year ultimate average cost of workers’ compensation claims is 10% lower than the competition, according to an internal analysis of Schedule P filings valued as of the end of 2014.

Technology Creates Opportunity

What’s come of this is an environment within Liberty where questions are asked and solutions are sought, where data, analytics, and innovation come together. Data, predictive analytics, and innovation teams work interchangeably to turn ideas into actions.

The keys to successful claims innovations, according to Glenn Shapiro.

“The claims process that we had 20 years ago or even five years ago is long gone,” said Shapiro. “We have to continually seek out innovation if we expect to compete with not only other insurance companies, but other services that people consume every day. Innovation isn’t just looking at new ideas; it’s making them come to life that makes the difference.”

Glenn Shapiro can be reached at [email protected].

SponsoredContent

BrandStudioLogo

This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Liberty Mutual Insurance. The editorial staff of Risk & Insurance had no role in its preparation.

Advertisement




Liberty Mutual Insurance offers a wide range of insurance products and services, including general liability, property, commercial automobile, excess casualty and workers compensation.

More from Risk & Insurance

More from Risk & Insurance

The Profession

For This Pharmaceutical Risk Director, Managing Risk Means Being Part of the Mission to Save Lives

Meet Eric Dobkin, director, insurance and risk management, for Merck & Co. Inc.
By: | September 28, 2018 • 5 min read

R&I: What was your first job?
My first job out of undergrad was as an actuarial trainee at Chubb.I was a math major in school, and I think the options for a math major coming out are either a teacher or an actuary, right? Anyway, I was really happy when the opportunity at Chubb presented itself. Fantastic company. I learned a lot there.

R&I: How did you come to work in risk management?
After I went back to get my MBA, I decided I wanted to work in corporate finance. When I was interviewing, one of the opportunities was with Merck. I really liked their mission, and things worked out. Given my background, they thought a good starting job would be in Merck’s risk management group. I started there, rotated through other areas within Merck finance but ultimately came back to the Insurance & Risk Management group. I guess I’m just one of those people who enjoy this type of work.

Advertisement




R&I: What is risk management doing right?
I think the community is doing a good job of promoting education, sharing ideas and advancing knowledge. Opportunities like this help make us all better business partners. We can take these ideas and translate them into actionable solutions to help our companies.

R&I: What could the risk management community be doing a better job of?
I think we have made good advancements in articulating the value proposition of investing in risk management, but much more can be done. Sometimes there is such a focus on delivering immediate value, such as cost savings, that risk management does not get appropriate attention (until something happens). We need to develop better tools that can reinforce that risk management is value-creating and good for operational efficiency, customers and shareholders.

R&I: What’s been the biggest change in the risk management and insurance industry since you’ve been in it?
I’d actually say there hasn’t been as much change as I would have hoped. I think the industry speaks about innovation more often than it does it. To be fair, at Merck we do have key partners that are innovators, but some in the industry are less enthusiastic to consider new approaches. I think there is a real need to find new and relevant solutions for large, complex risks.

R&I: What emerging commercial risk most concerns you?
Cyber risk. While it’s not emerging anymore, it’s evolving, dynamic and deserves the attention it gets. Merck was an early adopter of risk transfer solutions for cyber risk, and we continue to see insurance as an important component of the overall cyber risk management framework. From my perspective, this risk, more than any other, demands continuous forward-thinking to ensure we evolve solutions.

R&I: What’s the biggest challenge you’ve faced in your career?
Sticking with the cyber theme, I’d say navigating through a cyber incident is right up there. In June 2017, Merck experienced a network cyber attack that led to a disruption of its worldwide operations, including manufacturing, research and sales. It was a very challenging environment. And managing the insurance claim that resulted has been extremely complex. But at the same time, I have learned a tremendous amount in terms of how to think about the risk, enterprise resiliency and how to manage through a cyber incident.

R&I: What advice might you give to students or other aspiring risk managers?
Have strong intellectual curiosity. Always be willing to listen and learn. Ask “why?” We deal with a lot of ambiguity in our business, and the more you seek to understand, the better you will be able to apply those learnings toward developing solutions that meet the evolving risk landscape and needs of the business.

Advertisement




R&I: What role does technology play in your company’s approach to risk management?
We’re continuing to look for ways to apply technology. For example, being able to extract and leverage data that resides in our systems to evaluate risk, drive efficiencies and make things like property-value reporting easier. We’re also looking to utilize data visualization tools to help gain insights into our risks.

R&I: What are your goals for the next five to 10 years of your career?
I think, at this time, I would like to continue to learn and grow in the type of work I do and broaden my scope of responsibilities. There are many opportunities to deliver value. I want to continue to focus on becoming a stronger business partner and help enable growth.

R&I: What is your favorite book or movie?
I’d say right now Star Wars is top on my list. It has been magical re-watching and re-living the series I watched as a kid through the eyes of my children.

R&I: What is the riskiest activity you ever engaged in? When I was about 15, I went to a New York Rangers versus Philadelphia Flyers game at the Philadelphia Spectrum. I wore my Rangers jersey. I would not do that again.

Eric Dobkin, director, insurance & risk management, Merck & Co. Inc

R&I: What is it about this work you find most fulfilling or rewarding?
I am passionate about Merck’s mission of saving and improving lives. “Inventing for Life” is Merck’s tagline. It’s funny, but most people don’t associate “inventing” with medicine. But Merck has been inventing medicines and vaccines for many of the world’s most challenging diseases for a long time. It’s amazing to think the products we make can help people fight terrible diseases like cancer. Whatever little bit I can do to help advance that mission is very fulfilling and rewarding.

R&I: What do your friends and family think you do?
Ha! My kids think I make medicine. I guess they think that because I work for Merck. I suppose if even in a small way I can contribute to Merck’s mission of saving and improving lives, I am good with that. &




Katie Dwyer is an associate editor at Risk & Insurance®. She can be reached at kdwy[email protected]