3 Ways Data Can Drive Meaningful Risk Reduction in the Public Sector
It has been 33 years since Time magazine touted the headline “Sorry, America, Your Insurance Has Been Canceled.”
In the 1980s, insurance premiums were skyrocketing with no clear reprieve in sight. The industry was facing a liability insurance crisis, and the availability of certain coverages for public entities waned, leaving many without general liability.
“The risks were too high for the industry to keep insuring at that time,” said Jody Moses, Managing Director, Public Entities, Pools and Associations for Sedgwick.
“So, public entities self-insured their risks — property, general liability, workers’ compensation. They formed pools or self-insured on their own.”
The move has proven to be a good thing for this thriving sector; now, Moses said, public entities have a huge opportunity to take the knowledge and data they’ve collected over the last three decades and use it to better protect themselves against growing risks.
From airports to municipalities, public libraries and schools, public entities “face every risk conceivable,” said Moses.
“But they also have all this data from each facility. They have information on top drivers of loss and the cost of risk.”
Data collection and analysis has continued to play a huge role in the insurance industry, enabling carriers to better assess risk and underwrite policy. The challenge for public entities, however, is in learning how to best use that data.
Here are three ways in which public entities can harness their data to their advantage.
1) Utilizing data across multiple jurisdictions enables risk management to identify risk mitigation strategies that work and prevent future loss.
Each public entity has its own set of data that measures its exposures, risks, previous losses and proven results.
“They have their own data that helps them make decisions about what’s going on in their agency,” said Moses.
With data at their fingertips, risk managers can also enact change, identify what’s driving their losses and implement strategies and risk prevention tools. But there’s another way public sector risk managers can boost their programs – including data sets from outside jurisdictions.
“Public entities are one of the most open sectors to sharing information,” said Moses. “With the exception of personal identifiers or data expressly excluded by HIPAA, there’s virtually nothing proprietary in the public sector when it comes to data.”
Measuring data against other similar agencies in the same or similar jurisdictions is a huge opportunity for a public entity’s risk management department, because harnessing data across a larger pool helps them benchmark progress on a larger scale.
“Risk managers can make better risk decisions by being able to view this data,” said Moses.
The challenge is in creating a common way to pull data across public entities. Moses said being able to aggregate all that data and demonstrate what the costs are to public entities can only be accomplished with a standardized data collection process.
“The goal is to get reliable, clean and credible data,” she said.
2) Public entities are in a unique position to impact policy and legislation.
New regulations and laws come into effect every day. Each new move by legislative bodies can impact public entities, and so this sector has a unique opportunity to influence policymakers when decisions are in flight.
“There is a need for public entities and risk managers to get involved in telling their story to policymakers,” Moses said. “Data can tell that story.”
Yet learning how to harness the data to tell the story is proving challenging. For example, almost every jurisdiction has initiated legislation to include or expand existing injuries and illness that would be presumed to be compensable as it relates to safety personnel.
In order to speak with the legislature about the projected increased costs to public entities and ultimately the tax payers associated with the proposed legislation, public entities had to sort through their data to tell their story.
But it wasn’t an easy road to get there.
“As we move forward, risks are getting even more severe and more challenging, and the need to tell a credible story is ever more pressing,” said Moses. “Data science, and the use of data, has become such an integral piece in helping policymakers understand the reality of these risks.
“The voice of the public is not going to be heard unless public entities can tell the story credibly with the data they’ve aggregated,” she added.
3) With time, public entities can utilize their data to predict and prevent loss.
The idea of predictive analytics is powerful, especially in areas like workers’ compensation.
Real-time data can show how public sector workers are performing and determine if there are potential places for injury. With analytics, public entities can reduce exposure or prevent future losses from occurring.
But, “until public entities get clean, consistent and standard data across multiple jurisdictions, it will be hard to accurately use predictive analytics,” Moses said.
“If public entities can bring their data together — not just one single public entity doing it on their own — but if everyone starts aggregating their public entity data, they can really start to implement strategies to reduce risk and cut losses.”
Gathering Clean, Useful Data Takes Partnership
One thing rings true: In order to benefit from data harnessing, public entities must invest in cleaning their data and using standardized methods across the board to capture each new piece of information as it comes in.
Public entities can participate in associations that are supporting efforts to enhance data and analytics. In fact, according to Moses, many of these agencies are already looking to partner with public entities.
“PRIMA, the Public Risk Management Association, which is national and has local public risk and insurance management association partners, PARMA, the Public Agency Risk Management Association, and AGRiP, the Association of Governmental Risk Pools – all of these groups are really striving to partner with public entities,” she said.
Taking it one step further, public entities can partner with the right provider. Sedgwick has positioned itself as a partner that is passionate about public entities.
Sedgwick works with associations and public entity clients to really harness data. They provide technology that captures data for their public entity clients so they can best use it to make informed decisions.
“We ask the questions,” said Moses.
“We work with public entities to understand their goals, and then we help them design processes for collecting and utilizing data in a way that supports those goals and allows them to thrive. No other administrator has the scope and breadth of data that Sedgwick does, especially combined with years of experience supporting public entity clients. Our experts are well-versed in using data to inform decision-making, trigger action and improve outcomes, all with the complexities and requirements of public entities in mind.”
To learn more, visit www.sedgwick.com.
This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Sedgwick. The editorial staff of Risk & Insurance had no role in its preparation.