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

More from Risk & Insurance

4 Companies That Rocked It by Treating Injured Workers as Equals; Not Adversaries

The 2018 Teddy Award winners built their programs around people, not claims, and offer proof that a worker-centric approach is a smarter way to operate.
By: | October 30, 2018 • 3 min read

Across the workers’ compensation industry, the concept of a worker advocacy model has been around for a while, but has only seen notable adoption in recent years.

Even among those not adopting a formal advocacy approach, mindsets are shifting. Formerly claims-centric programs are becoming worker-centric and it’s a win all around: better outcomes; greater productivity; safer, healthier employees and a stronger bottom line.

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That’s what you’ll see in this month’s issue of Risk & Insurance® when you read the profiles of the four recipients of the 2018 Theodore Roosevelt Workers’ Compensation and Disability Management Award, sponsored by PMA Companies. These four programs put workers front and center in everything they do.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top,” said Steve Legg, director of risk management for Starbucks.

Starbucks put claims reporting in the hands of its partners, an exemplary act of trust. The coffee company also put itself in workers’ shoes to identify and remove points of friction.

That led to a call center run by Starbucks’ TPA and a dedicated telephonic case management team so that partners can speak to a live person without the frustration of ‘phone tag’ and unanswered questions.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top.” — Steve Legg, director of risk management, Starbucks

Starbucks also implemented direct deposit for lost-time pay, eliminating stressful wait times for injured partners, and allowing them to focus on healing.

For Starbucks, as for all of the 2018 Teddy Award winners, the approach is netting measurable results. With higher partner satisfaction, it has seen a 50 percent decrease in litigation.

Teddy winner Main Line Health (MLH) adopted worker advocacy in a way that goes far beyond claims.

Employees who identify and report safety hazards can take credit for their actions by sending out a formal “Employee Safety Message” to nearly 11,000 mailboxes across the organization.

“The recognition is pretty cool,” said Steve Besack, system director, claims management and workers’ compensation for the health system.

MLH also takes a non-adversarial approach to workers with repeat injuries, seeing them as a resource for identifying areas of improvement.

“When you look at ‘repeat offenders’ in an unconventional way, they’re a great asset to the program, not a liability,” said Mike Miller, manager, workers’ compensation and employee safety for MLH.

Teddy winner Monmouth County, N.J. utilizes high-tech motion capture technology to reduce the chance of placing new hires in jobs that are likely to hurt them.

Monmouth County also adopted numerous wellness initiatives that help workers manage their weight and improve their wellbeing overall.

“You should see the looks on their faces when their cholesterol is down, they’ve lost weight and their blood sugar is better. We’ve had people lose 30 and 40 pounds,” said William McGuane, the county’s manager of benefits and workers’ compensation.

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Do these sound like minor program elements? The math says otherwise: Claims severity has plunged from $5.5 million in 2009 to $1.3 million in 2017.

At the University of Pennsylvania, putting workers first means getting out from behind the desk and finding out what each one of them is tasked with, day in, day out — and looking for ways to make each of those tasks safer.

Regular observations across the sprawling campus have resulted in a phenomenal number of process and equipment changes that seem simple on their own, but in combination have created a substantially safer, healthier campus and improved employee morale.

UPenn’s workers’ comp costs, in the seven-digit figures in 2009, have been virtually cut in half.

Risk & Insurance® is proud to honor the work of these four organizations. We hope their stories inspire other organizations to be true partners with the employees they depend on. &

Michelle Kerr is associate editor of Risk & Insurance. She can be reached at [email protected]