Can the Auto Casualty Claims Process Assist Workers’ Compensation?

Can advancements in artificial intelligence that are being implemented in the auto insurance realm find traction in workers' compensation?

By: Shahin Hatamian and Norman Tyrrell | April 24, 2020

In today’s world, data is readily available. In an instant, your smartphone can tell you how many steps you’ve walked today, how many hours you’ve spent on Instagram and how many times you took an Uber last month.

In the insurance industry, data is also becoming increasingly more accessible due to the widespread availability of technology, helping claims organizations to better manage premiums, control medical spending and improve internal workflow efficiencies.

Specifically, in the auto insurance industry, companies have been using a variety of data sources, including telematics, smart phone apps and video, over the past few years to collect data that not only allows carriers to offer usage-based insurance to its customers, but also has been able to help claims organizations try to predict the severity of injuries based on an accident scenario.

Injury prediction technology, which is at the outset of being adopted in the auto casualty industry, also has the potential to be applied to workers’ compensation claims, which could provide improvements to the claims process for both claims organizations and injured employees.

How Does Injury Prediction Work in the Auto Casualty Claims Process?

In the auto insurance industry today, it is easier than ever for carriers to collect collision data and use that information to predict the severity and type of injuries that may result from the crash.

Shahin Hatamian, senior vice president of product management, Mitchell Auto Casualty and Workers’ Compensation Solutions

Many cars are outfitted with telematics systems — and this number is constantly growing. For example, Statista predicts that by 2030, there will be 146 million connected cars in operation in the U.S. — and claimants frequently are providing detailed information and photos almost instantly after an accident due to the availability of carrier mobile apps.

Additionally, photo-based estimating systems using computer vision and artificial intelligence are commercially available in the market today, making it possible for carriers to leverage technology to detect vehicle damage from photos submitted at first notice of loss.

Once carriers are able to collect data about an accident scenario, predictive models can then take that information and make an estimation about the type and/or severity of the injury.

For example, the following data could be input into the model:

Statistics from the telematics system reporting that the claimant was driving at 40 miles per hour at the time of the crash, the driver seatbelt was fastened, and that the airbag system deployed.
Information from the photo-based estimating system that the left side panel of the vehicle was damaged.
Data submitted by the claimant in the first notice of loss app and retrieved via policy information that he is a 55-year-old male, and was the driver at the time of the accident.

As an output, the artificial intelligence may use the collision data collected from the different sources to help predict what type of injuries that claimant may have sustained and the potential severity.

Knowing that information, carriers can first appropriately triage the claim to the right adjuster within the organization. Adjusters can also be better prepared to handle the claim.

For example, if the model predicts mild injuries, the adjuster could put the claim on a fast-settlement track to try to settle the claim quickly and avoid it spiraling.

If the model predicted a more severe injury, the adjuster could better understand the predicted treatment timeline to help manage the claim moving forward.

Additionally, the injury prediction information can help adjusters to better judge if treatments submitted for reimbursement are actually related to the injuries sustained in the accident.

The auto insurance industry has already seen the benefits of having the capability to predict injury type and severity from auto accident data. Injury prediction analytics has helped insurance carriers get the claim to the right teams quickly, identify potential fraud and speed up claims processing.

Predicting Workers’ Compensation Injuries

Historically, the auto casualty market has been on the forefront of consumer-facing digital transformation, while the workers’ compensation market has typically led the way in technology adoption for better interaction with providers and for cost containment.

Typically, there is a fair amount of overlap between the industries sharing technologies and solutions, since the claims process for both lines of insurance are very similar at the core.

Norman Tyrrell, product management and strategic planning activities director, Mitchell Auto Casualty and Workers’ Compensation Solutions

Using data to help predict injuries is one example of auto insurance technology that could be applied to the workers’ compensation claims process and has the potential to provide a variety of benefits for the industry.

First, about 6% of all workers’ compensation claims result from motor vehicle accidents, according to an NCCI report, providing an obvious application of the previously mentioned predictive technologies for these types of injuries.

But beyond motor vehicle claims, there is potential to use this technology in many different types of workers’ compensation claims.

How Would This Technology Work in Workers’ Compensation?

The first notice of loss after an auto accident parallels the first report of injury that takes place at the onset of a workers’ compensation claim.

At the first report of injury, workers’ compensation payors typically gather a fair amount of data about the accident, including the accident scenario, information about the claimant and more.

Workers’ compensation claims organizations could begin looking at ways to standardize this data to make it more usable for predictive modeling purposes, as well as, collecting additional information, such as photos of the accident scene, which they can then process using computer vision technology, and accident scene descriptions, equipment involved, physical environment and more.

Additionally, telemedicine mobile apps can be integrated, enabling nurses or other medical personnel to provide immediate triage information.

All of that data collected at the first report of injury can be used to provide actionable insights that could be pre-populated into the adjuster’s system to save time and inform predictive models on the type and severity of the injury that may have occurred, just like in the auto casualty claims process.

In the workers’ compensation industry, a prediction of the injury types and severities could not only be used to better triage claims and help manage treatment timelines, but also help claims organizations better direct care, improve workplace safety and more.

Here is a list of a few of the potential benefits to the workers’ compensation industry:

Improve triage to get claims to the right teams quickly
Help injured employees get the right treatments from the start of the claim to improve return-to-work time
Assign case management resources to claims early in the process to help manage costs and improve treatments
Speed up claims processing, which provides benefits to both the payor and the injured employee
Help reduce fraud and prevent abuse of the workers’ compensation system
Potentially provide workplace safety improvements and recommendations, for example encouraging truck drivers to wear their seatbelts or providing improved safety gear for construction workers

The Future of Injury Prediction Technology

In order for claims organizations to effectively use injury prediction technology, it is important that artificial intelligence models produce accurate results and that those results can be effectively interpreted and utilized by an adjuster in the claim handling process.

In a study comparing adjuster performance to a predictive model at first notice of loss, Mitchell found that a predictive model was able to more accurately and more consistently predict both the existence and severity of an injury than a human adjuster.

As injury prediction models continue to improve and become more precise over time and more data becomes available from both auto casualty and workers’ compensation accidents, this technology could expand and provide additional benefits for both claims organizations and claimants. &

Shahin Hatamian is senior vice president of product management for Mitchell International. He is responsible for product direction, marketing and strategic initiatives for Mitchell’s auto casualty and workers’ compensation software and service solutions. Norman Tyrrell directs the product management and strategic planning activities for Mitchell Auto Casualty and Workers' Compensation Solutions.

Why Insureds Might See an Uptick in M&PL Claims

George Schalick, Jr., Senior Vice President of the Management and Professional Liability Division, Philadelphia Insurance Companies

The current soft market might come as a bit of a surprise as it does not track with previous underwriting cycles and economic conditions. Afterall, many privately held and non-profit organizations struggled during the early days of the pandemic with shutdowns and rapidly declining revenues. But the Government assistance programs, like the Paycheck Protection Program loans, helped keep many afloat during the tough times.

“During COVID many organizations stopped doing business until they were able to sort out all of the health and safety challenges,” Schalick said. “They were forced to lock down, but then all the government assistance programs allowed them to keep people employed. The increased volume of claims we anticipated we would see coming from the lockdowns and restrictions that were imposed upon businesses in the U.S. didn’t manifest at first.”

“Just because there wasn’t an onslaught of reported claims at the beginning of the pandemic, doesn’t mean the circumstances that would give rise to a claim being reported didn’t occur. Courts and the judicial system were closed or slowed and now that they are back open, we’re starting to see the circumstances that occurred during the COVID lockdowns becoming claims today,” Schalick said. “Litigation is progressing.”

Added to the delayed pandemic litigation is a concern over newer claims that might be filed as the country inches toward an economic downturn. Though a recession was avoided in 2023, experts think a soft dip could occur in 2024, with 76% of economists saying there’s a 50% or less chance of an economic downturn this year — that almost always results in more management liability claims.

“During the Great Recession in 2008, we saw an almost immediate spike in claims because of the economic conditions and the pressure it placed on organizations. They were making personnel changes with significant belt tightening almost immediately.” Schalick said.

What’s in Store for M&PL Policy Rates in 2024?

Despite an uptick in claims and increased economic uncertainty, management liability rates haven’t increased, resulting in market-wide pricing levels that may not meet the increased pressure of rising settlements and jury verdicts.

“Rates are going the other direction and settlement values are not falling,” Schalick said.

The mismatch between rates, claim frequency and severity is, in part, because carriers experiencing the dramatic soft market in the public D&O market are seeking premium gain in the private and non-profit market.

“In the public company market, the rates have been decreasing significantly. The rates were increasing in the private, not-for-profit market, and rightfully so, but there’s a desire to supplement overall mid-size D&O for carriers who also write private not-for-profit, and they see that as an opportunity to aggregate premium,” Schalick said. “So the always competitive landscape in the private, not-for-profit market has dramatically increased in the last 18 to 24 months.”

Still, companies of all sizes and types should be concerned about management liability rates in the future. Legal system abuse is resulting in increases in both the amount of litigation and the size of verdicts plaintiffs are receiving.

Certain areas of the country are particularly vulnerable to this type of legal system abuse. As a result, insureds in these localities are likely to be vulnerable to rate increases.

“The environment is so positive for the plaintiff that forces premium increases so carriers are able to stay in that market long term,” Schalick said.

Why a Tenured Carrier Partner Can Help Insureds Navigate An Uncertain Market

It’s clear that insureds are facing an uncertain M&PL market over the next few years. Fortunately, carriers with a long history in the M&PL space will be there to offer stability.

Philadelphia Insurance Companies has been supporting this market for 35 years. PHLY is committed to offering long-term rate stability, even as economic and claims trends start to push premiums upwards. They have an appetite for all sorts of companies, large and small, for-profit and nonprofit alike.

“We’ve been at this game for a long time and are one of the most tenured underwriters in this space,” Schalick said. “We like to stay very consistent.”

PHLY has worked with both for-profit and non-profit on management liability policies. With dedicated M&PL teams throughout the company’s 13 regions, PHLY provides the support agents and brokers are looking for on behalf of their clients. The teams know their regions well and can respond to local trends. They’re also dedicated to making the renewal process as easy as possible for their partners and policyholders.

“We have real confidence in our results, so we focus a lot on making the renewal experience as painless as possible for all agents and insureds,” Schalick said.

The company is also investing in tools to help insureds avoid losses. Earlier this year, they launched a new online risk management platform, PHLYGateway, which offers resources for insureds on how to create an employee handbook and trainings on issues such as recognizing workplace sexual harassment and discrimination.

If insureds have questions, they can consult a Best Practices Help Line, provided via the platform. That way, they can get on the spot risk management guidance to help them prevent claims.

To learn more, visit: https://www.phly.com/mplDivision/managementLiability/default.aspx.

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

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