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Getting the “jump” on jumper claims

Any claims manager will tell you that accurate and efficient allocation of the correct financial and employee resources is crucial to any successful casualty claims department.  From the outset it is vital that any claim has adequate reserves to cover the costs throughout the life of the claim; and that it is handled by someone with the right level of experience to identify opportunities to mitigate some of the costs and settle the claim as quickly and efficiently as possible.

For some claims this is easier than others.  Catastrophic claims or fatalities are easily identified right from the first notification of loss (FNOL); these will end up being settled as high cost claims, so adequate reserves must be set aside early and the claim closely managed by the most experienced of handlers.  Low cost claims, for example, minor first aid incidents, require little or no ongoing case management and can be settled at a relatively low cost.

However, there is a third category of claim that can be a lot more complex to manage.  Although appearing relatively benign at FNOL, these claims can suddenly “jump” at around the 90-day mark, becoming high cost claims that require close management, an increased reserve and more resources.  These are known as ‘jumper’, or ‘sleeper’ claims and according to our partner, actuarial experts Oliver Wyman, they account for 40% of ultimate losses, the same proportion of costs as those high cost claims.

Oliver Wyman further states that these claims only account for around 5% of overall claims distribution, so although they are less frequent, they end up being higher in severity.  Jumper claims can be difficult to identify at FNOL stage and traditional claims management approaches often fail to spot them until later in the claims cycle, when the opportunity to take action to mitigate the final cost has been lost.  We calculate that for every $10m in claims outlay, a reduction in the cost of jumper claims by 10% could lead to a $1m saving, for this to be achieved it is vital to be able to identify these claims as early as possible, as soon as they demonstrate the potential to jump.  But how can claims managers get the jump on these notoriously complex claims?

Predicting the future

Predictive analytics is a method of forecasting that employs multiple sources of both internal and third-party data to predict the way a claim is likely to unfold. This allows claims managers to get an earlier indication of those claims that have the potential to ‘jump’ and take proactive steps to mitigate the costs earlier by allocating the appropriate resources and identifying possible preventative measures.

Generally, the more data a claims manager can capture the better as it will enable them to build up a detailed picture of the claim and likely outcomes. Predictive analytics takes this data discovery and prediction one step further by automating the process and providing real-time updates as and when new information on the case is recorded and alerting claims managers when there is likely to be an adverse development in the claim.

The kinds of data that claims managers can collect to help them to better understand the likely path of the claim are endless. In our experience at Ventiv, some of the most useful when it comes to predicting the length and severity of a claim are; the age of the person, whether they have any pre-existing medical conditions that could affect recovery, their primary treatment and the maximum medical improvement (MMI) date, this is the date established by the doctor indicating the point at which the claimant’s medical condition has stabilised and further improvement is unlikely.

Any of these factors will help to give the claims manager a better idea of the expected length of the claim and the costs involved and allow them to identify a jumper claim at a much earlier stage.

Investing in the latest predictive analytics

At Ventiv, we’ve invested significantly in our analytics capabilities and last year partnered with Oliver Wyman to develop Claims OPT (Optimisation and Predictive Triaging).  Claims OPT is a solution designed for risk and claims managers that enables them to harness the power of predictive analytics to help them to make better informed and timely decisions about their claims. 

The solution features sophisticated real-time, continually updating predictive modelling, meaning that as the claim progresses and the system is updated with more and more information, the analytics capabilities can provide live updates to the predicted final cost of the claim. With each extra piece of information added to the claim record, the claims management system will re-score the claim for its potential to develop adversely, with certain pieces of information triggering immediate alerts to the adjuster.  This will help the claims manager to better allocate resources to the claim, balance the workloads of handlers and manage the costs.

Another standout feature of our claims solution is the ability for it to generate a recommended workflow to guide claims managers through suggested management routes for the claim, this enables manager to handler the claim as efficiently as possible based on analysis of the data.

Claims OPT can be integrated into our Ventiv insurance claims management software product making it one of the most powerful claims risk management tools on the market.

To find out more about the power of predictive analytics, please contact me Kristi.mcfarlin@ventivtech.com


3SIXTYº Magazine - Analytics

Apr 27, 2020

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