While almost every insurer has implemented a claims system and still others have more than one, most have not taken advantage of the wealth of claims data collected. This byproduct of the claims process is a goldmine of insight into the operation. When effectively put to use via business intelligence (BI) tools, the secrets buried deep in the data can help transform claims managers into knowledge managers.
A recent analyst report noted that 70 percent of insurer revenue is spent on claims, with about 20 percent spent to manage the claims process. Add in that claims handling is a major contributor to customer satisfaction and it is no wonder that insurers are continually looking for technologies to help. Modern claims administration systems have enhanced the process and enabled greater efficiencies, but BI can take the operation to the next level - beyond automation that modern claims systems offer to better decisions for improved claims outcomes.
Tracking key measures such as frequency, severity, claims closed, open to close ratio, and average duration/settlement timeframe, arms an insurer with actionable knowledge. How many claims went to litigation and what were the results? With this knowledge, insurers can better determine what future cases make sense to pursue.
Additional examples of where BI is used in performance management of claims include:
Some insurers use BI for cycle time analytics to track various claim recovery activities and results. These analytics not only offer a view of the overall claims processes effectiveness, but can also identify trends by office or event. Insurers may discover that they performed better in certain catastrophe events than others. With that knowledge they can then begin to assess the ‘why.’
While BI tools have much to offer a claims operation, these technologies don’t come without challenges.