Most senior managers have a high degree of natural talent and intuition that make them great leaders. Those abilities, combined with a solid understanding of the business, usually are enough to weather virtually any market conditions.
However, these are unprecedented times, with unique factors influencing our direction and derailing our traditional business plans. Today it takes a more sophisticated analytical approach to sort through all of the dynamic forces that can impact our strategies.
We need only look at the outstanding gains achieved in the underwriting field once leaders embraced analytics and integrated them into their rating formulas. These insurance industry innovators created a distinct competitive advantage in their ability to accurately assess and price their risks.
Analytics have made it faster to assess new business risks and easier for brokers to close a deal. So not only have analytics improved accuracy and profitability, but they have also improved the end-to-end process and made it easier to do business with those companies. With results this undeniable, why is it taking our claim brethren so long to integrate analytics into claim processes?
Data in a Dashboard View
The impact of dashboards on claim leaders may be comparable to the introduction of the Internet in terms of the informational value that dashboards can bring to a business decision maker. All of the data that is crucial to us as leaders can then quickly be delivered on a silver platter.
Other departments that have used dashboards for their business analytics report eye-opening results, which would have taken months to unearth manually — if ever attempted. One insurer used a dashboard to reveal that the pricing of its underinsured motorist coverage was the key factor negatively affecting its loss ratio.
Another company discovered its pricing for replacement cost coverage was causing its homeowners' line of business to be unprofitable. Think of the opportunities realized by having access to timely data to proactively address and reverse emerging negative trends throughout your enterprise.
Knowledge Is Power
How often do you need to know how your numbers are trending? Are you at the mercy of the IT department that publishes your static reports only at the close of each month? Could you intervene earlier with modified programs or processes if you were able to monitor your data throughout the month?
A business dashboard empowers you to lead and influence results rather than react and then try to explain what happened. A thoughtfully designed dashboard can be relevant to every level of your organization, from the adjuster to the CEO.
Each person can use the drill down/roll up features within the dashboard to understand how their activities impact the results of the organization. Dashboards allow everyone to continually monitor their current situation and the factors or conditions impacting it.
Claim Opportunities
When claim costs rise, we begin our search for the factors that are causing the increase. A dashboard view of the data can instantly hone in on critical factors. Colorful gages, dials, and bars indicate the costs, coverage, or lines of business that are out of pattern.
By simply clicking on the indicator, you can easily drill deeper into the supporting data to identify the problem area(s). Is the problem because of increased part prices, or is it the body shop labor rates? Why are defense costs rising? Are legal fees the problem, or is it the administrative expense associated with electronic discovery? Why are you drawing more lawsuits in a certain state or losing in arbitration?
You can't effectively manage the issue until you can correctly identify the issue. Your dashboard allows you to make a difference when it still matters.
Beyond Fraud
Fraud is typically the first area that comes to mind when discussing analytics. Because of the sophistication of fraudulent schemes, our industry typically identifies only 20 percent of the fraudulent claims we receive. Yet, when CSC conducted a survey of P&C executives, we found that 62 percent still rely upon little more than a manual red flag to identify fraudulent claims.
The perpetrators of fraud, on the other hand, are now using databases that monitor our SIU adjusters and the thresholds of each company for referring a claim to SIU. It's time for us to up our game by integrating flags derived from analytics into our claims applications to ensure we identify and investigate all claims with SIU potential.
As an industry, we are great at paying claims, but we easily lose focus on subrogation activities that could offset our loss payments and increase profitability. Analytics can be used not only to identify the factors that signal subrogation potential, but also to track those claims throughout their lifecycle to ensure we maximize our recoveries.
In a previous article, I discussed the manual steps that can be fully automated when implementing straight through processing for straightforward claims. Analytics can open the door to many of these dramatic process changes and efficiency gains.
The knowledge gained from analytics can automatically set an accurate and timely reserve. It can validate that the settlement amount requested by a customer is within normal range and it can authorize the payments — all without adjuster intervention. When claims require the involvement of an adjuster, analytics can select and redirect those claims as needed for specialized or SIU handling.
Don't confuse this with a workflow tool. The knowledge predicated on analytics can process a portion of your claims from start to finish, while intelligently highlighting those that need personal attention. Analytics ensure that your adjusters are devoting their time to claims where they have an opportunity to impact the settlement. This means that your leadership team can also stop wasting time rubberstamping payment authorizations. Instead, they can redirect their time to monitoring trends and impacting results.
Being a leader involves thought leadership to transform your organization into one that is highly efficient and effective. Business analytics are the most powerful enabler to surface in 20 years.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.