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].

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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.

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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

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]