In today’s challenging global economy, insurers face the difficult task of controlling costs and allocating resources and capital effectively, all in the face of intense, rising competition. Generating additional business lift more efficiently is a high priority, and insurers are increasingly relying on new data sources and advanced analytics to do so.
Text mining is one such capability that property and casualty (P&C) insurers are increasingly using to uncover critical insights from unstructured data sources. Using text mining, carriers are able to identify high-impact opportunities selectively, control losses and costs, allocate resources, and optimize financial outcomes. In the back office, text mining allows them to gain a better understanding of their claims operations, minimize missed financial opportunities, optimize workflow, detect potentially fraudulent claims, and derive actionable insights from customer feedback, among many other benefits.
Although setting up a text mining system can be challenging given the unstructured flow, typos, and abbreviations in adjuster notes, the eventual business results are well worth the effort. Furthermore, once a core text mining engine is established, it can be quickly and easily extended to produce insights across a variety of claims concepts, from identifying the at-fault party to fraud red flags, dissatisfied claimants and insureds, and details about the location and the cause of a given loss.
Mining for Fraud Mitigation
Fraud is a challenge that pervades all industries, especially P&C insurance. Estimates from the Insurance Information Institute (I.I.I.) indicate that fraud accounts for approximately 10 percent of the P&C insurance industry’s incurred losses and loss adjustment expenses (LAE)—or about $30 billion each year. Recent indications also show that fraud is a growing menace in personal injury protection (PIP) states, with direct impact on company results and insured premiums. Recognizing, investigating, and denying suspicious claims are thus key priorities for carriers.
Simple applications of text mining such as this can increase adjuster productivity and potentially improve a company’s effectiveness in handling previously missed subrogation opportunities.
Manage the Customer. Innovate the Process.
Customer contact areas at insurance companies typically deal with issues other than claims. The issues can range from billing concerns to policy- and coverage-related inquiries.