Claims Handling

These Big Data Tools Are Actually Impacting Claims

Claims handling is a constant source of friction between insurers and their insureds. Will new communication tools and big data be able to sort this old problem out? 
By: | June 1, 2018 • 5 min read

When we say “Big Data,” we’re talking about the ever-increasing amount of digital information being generated and stored. Companies are investing in technologies such as satellite imagery, artificial intelligence (AI) and blockchain to enhance the assessment of losses, settling of payments and other parts of claims handling.

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Big data has a role in these technologies and in how the assessments play out.

In the case of low-value, low-complexity property damage claims, the most sanguine views foresee a future where losses will be paid automatically after high-quality images are safely sent by the policyholder to the insurer.

AI will make decisions by comparing the claim to extensive data banks of similar loss events. If indemnification is due, payments will automatically be ordered via blockchain-enabled smart contracts.

Complex property damage and liability losses present a different set of challenges, and it looks unlikely that human interaction will ever be completely bypassed. But novelties — like AI and drones — can help to shorten the life cycle of even the most complex claims.

Accelerating the Claims Process

Loss adjusting firm Crawford & Company claims it can reduce the time it takes to handle certain types of claims from 30 to 4.7 days, thanks to the use of drones in accelerating inspections. The drone-sharing system developed by WeGoLook, an Insurtech Crawford & Co acquired last year, was put to the test after hurricanes swept through the United States and the Caribbean in 2017.

“We deployed drones in Puerto Rico as the airport was closed after the hurricane, and adjusters were not able to fly into the island,” said Rohit Verma, chief operating officer, Crawford & Company.

“We then activated some WeGoLook members who were able to take initial pictures that we shared with insurers, so that they could take a quick first look at the damages.”

He said these technologies not only accelerate the process but also reduce the claims settlement costs by 20 to 30 percent compared to traditional methods.

Incorporating New Technologies

Satellite imagery and smartphone applications are also being deployed to quickly and safely capture visual data.

Dave Fitzgerald, global chief claims officer, Starr Companies

Loss adjusting company Cunningham Lindsey (recently acquired by Sedgwick) has developed a number of projects.

The app iSite, for example, enables adjusters to make high-definition images of a loss site that can then be turned into a film and safely shared with other participants in the process, said Neil Gibson, the company’s loss adjusting services director.

The company also employs satellite imagery provided by third-party suppliers to assess losses in war-torn areas, he added.

The company introduced a Facetime-like messaging application policyholders can use to establish a safe line of communication with the underwriter. Information provided is immediately shared with the several parties involved.

“Technology frees people up and gives them more time to focus on customer service and other important activities,” said Dave Fitzgerald, global chief claims officer, Starr Companies.

But simply launching new technology is not enough. Insurers need to ensure the data collected is properly crunched and turned into palpable benefits for clients.

That’s where machine learning and AI come into play, as they enable claims departments to quickly identify patterns that will inform more efficient decisions.

“When we start looking at indicators, and we get into predictive analytics, we can establish which files will have the most impact in a given day,” Fitzgerald said. “We can then set up a proactive diary with our adjusters.”

He added: “We can get claims to adjusters quicker. As we integrate technologies, tasks that were handled by our adjusters can be handled by third parties, such as independent adjusters. In the case of statutory lines such as workers’ comp, the system reminds claims officials of when forms need to be filed again.”

Data Analytics’ Role in Claims

In-depth data analysis can lead to preventive measures that will reduce the impact of future losses, Fitzgerald said. “IT can help with loss avoidance as the deep knowledge of insured issues and past claims can help red-flag issues for loss control services.”

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The predictive capabilities of data analytics should eventually benefit even complex liability cases, according to experts.

For example, they can enable claims departments to look for particular nuggets of information among thousands of court cases and media reports with one click instead of sending someone to manually dig for data in paper files or internet searches.

“Shortage of data is not a problem for organizations. The problem is that the wealth of data that they have may not be stored in a structured form.” — Rajesh Iyer, head of data science, Xceedance

“We are using data analytics to look at the litigation probability of a case,” Verma said. “By making a recommendation to the insured or the insurers, we can help to close a case faster if we think there is a high probability of it leading to litigation.

Rajesh Iyer, head of data science, Xceedance

“We can also look at litigation outcomes, based on the type of claim, the parties involved and other factors, in order to accelerate the claims.”

Rajesh Iyer, head of data science for Xceedance, an IT consulting firm, noted that AI and machine learning have the potential to boost “judgment tasks” within the claims handling process, which rely on the data accumulated by insurers while evaluating losses.

“Shortage of data is not a problem for organizations. The problem is that the wealth of data that they have may not be stored in a structured form.”

Incorporating Blockchain

Blockchain is the next frontier.

At least in theory, as blockchain systems allow parties of an insurance policy to add and share information securely via a common but unique ledger that creates new records for every single change, they make it possible to set up smart contracts that will trigger payments automatically, once agreed conditions are met.

“If a loss happens, participants can get information immediately around the claim, including pictures and reports, speeding up its resolution,” said Shawn Crawford, global insurance leader at EY, a consultancy firm.

Blockchain technology also lowers fraud risk, removing another hurdle to the quick settlement of claims.

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The challenge for many underwriters and service providers is to have the financial muscle to develop the technologies that can turn claims handling into a more efficient job.

To dodge this difficulty, many are opting to partner with innovative FinTech companies that, as Fitzgerald noted, force established firms to continuously question old industry practices.

Lloyd’s underwriter Brit is one of them. It has an agreement with online banking platform Vitesse to streamline the management and tracking of loss funds, a common source of claim settlement delay.

Sheel Sawhney, Brit’s global head of claims, said the system enables the company’s partners to make direct payments to policyholders at a lower cost, while automatically performing tasks such as sanctions vetting.

“What’s more, we have full visibility of payments and balances, and it positions us to further reduce the time it takes to pay claims.” &

Rodrigo Amaral is a freelance writer specializing in Latin American and European risk management and insurance markets. He can be reached at [email protected]

More from Risk & Insurance

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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.

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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.

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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 [email protected]