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Each year, U.S. Property-Casualty insurers pay over $200 billion in losses and spend nearly $40 billion managing claims. Broadly accepted industry estimates suggest that current payments and adjustment expenses on these claims include $11-$14 billion of overpayment, or leakage. Most carriers have implemented claims management systems to improve claims processing and reduce leakage through improved processing efficiencies. However, many carriers are missing a golden opportunity to reduce leakage by improving the decision making process of their adjusters. Claims adjuster decisions on “moderately complex claims” (i.e. shared liability, soft tissue injuries, litigation) can vary widely, are often inconsistent, and offer limited transparency, all of which can result in a carrier still incurring a loss and leakage rate of 10 percent or higher. Typically, sophisticated analytical techniques are widely used by both property and casualty insurance carriers. While these techniques have been deployed successfully for actuarial and underwriting purposes, it is in claims management where expert-based decision and analytical applications can bring about revolutionary innovation, bottom-line savings, reduced litigation expenses, and marketplace advantage.

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