There can be tremendous value gained to the underwriting process when underwriters "know" what is going on in the book of claims. Yet claim operations and technologies have traditionally existed in their own separate silos, away from the processes technologies that support the underwriting process.
Despite the traditional separation, claim data that developed as a "normal part of good claim handling" can be combined with common underwriting data to provide powerful rating information and insight. When that insight is paired with the appropriate rules engine and workflow technologies, it can drive actions to improve underwriting results.
Most carriers still follow a traditional paper-based method of communicating this type of information. This process is slow, cumbersome, and takes the focus of the adjuster away from handling the claim to a non-system supported manual exception process. The consistency, timeliness, quality, and value of this exchange can be further diminished by adjusters if they are:
- Not being fully cognizant of what type of information is important to the underwriting community (which is a potential burden to the underwriting community as well...);
- Not recognizing the importance of reporting potential underwriting inconsistencies to an insurer's ability to price risk appropriately and ensure competitive pricing across their policy book or;
- Working under the assumption that underwriting will identify the issue and resolve them through their standard risk review processes.
Overlaying these issues are the priorities of the claim adjuster, who place the provision of top quality claim handling service over filling out paper forms for the underwriting organization.
Insurance Services Office (ISO) reports that insurance industry losses due to workers' compensation fraud are as high as $5 billion each year. They also estimate that, for every $1 lost through claimant fraud, at least $4 to $5 is lost through premium fraud.
The Importance of Information
Information developed during the claim handling process can add substantial benefits to the underwriting rating and pricing decision process. The straight-forward collection and comparison of discrete data elements commonly found in both claim and underwriting systems, combined with system enabled business rules and execution logic can provide significant value to ensuring that appropriate knowledge of the risk is made available to the underwriter. This allows the provider with the ability to make adequate rating and pricing decisions that are consistently executed across the policy book.