By Charles Martin, Casualty Consulting Practices Leader, Marsh Risk Consulting
A key driver of an organization’s success and achievement of its business goals is the execution of strategic decisions based on reliable, actionable data. A vigilant risk manager should have firm control of his or her organization’s claims-related data and be able to implement data integrity management best practices to ensure that data is accurate, complete, and accessible.
Who Owns Your Data?
In order to successfully manage data whether it is workers’ compensation claims or property values, organizations need to embrace the ownership of their data. Ownership does not simply mean “responsibility,” nor does it mean outsourcing to a vendor. Rather, data ownership requires active in-house oversight that is built into employees’ job descriptions at all levels. Organizations often believe that they can rely on their risk management information system’s checks and balance protocols to manage their data. They do not understand that these systems lack the actual intelligence to examine the data logically. For example, an accident may have a cause of loss of a laceration, but the nature of the injury may be a strain. A computer would not necessarily catch these disparate fields. By having colleagues in your organization oversee and own their data, this kind of error can be caught early before it causes real problems down the road.
Where Does Your Data Live?
In addition to data ownership, it is important for organizations to understand where their data resides. Most organizations generate data through numerous processes, combining and manipulating multiple raw data feeds from multiple housing locations. It is not uncommon to find human resources data living on one system and workers’ compensation data living on another. This can result in disparate reports, unmatched values, and difficulty measuring real corporate impact – valuable information for senior executives with responsibility for various operations or locations. Data should be housed in secure systems that are designed to meet security and business needs – providing you with complete data sets that are consistently produced.
How Does Your Data Move?
A workflow process that is efficient and consistent will eliminate the number of “touches” that may cause data corruption and will increase accuracy in reporting. It is vital that workflow processes are in place to ensure that the data is in the same format and can be easily combined without relying on makeshift workarounds, which can increase the probability of errors. In addition to reducing the risk of poor data, an automated workflow process will reduce the person hours spent manually preparing data and producing metrics so risk management teams can focus on managing risk. Additionally, it is important that the amount of effort to retrieve data is minimal — another reason to improve workflow processes.
Is Your Loss Data At Risk?
Corrupt and erroneous data is risky — reliable data is critical. Whether an organization uses a single system or its data is spread across multiple systems and vendors, a comprehensive data management process is required to ensure data integrity. Every time an organization changes vendors, such as third-party administrators, or consolidates existing data into one system, the potential for changes to the data increases. A lack of industry standards, different business requirements, and field definitions that may not translate directly complicates data migrations further. It is recommended that data be audited by comparing output from prior systems to the data in new systems. Organizations should examine data fields including claim counts, dollar values, claim status, location codes, and fields repurposed for customization. Periodic audits should be conducted semiannually or at least annually, depending on the importance of the data.
What Is Your Data’s Return on Investment?
Showing a positive return is critical to winning support for any investment, especially a data integrity management one. A positive return reflects the financial (reduced cash flow, fees paid, costs allocated, reserves), operational (forecasting, missed opportunities), and productivity (manual work-around, redundancies) impacts that can be attributed to bad data. Compliance with regulatory requirements is also an important benefit of such an investment, as bad data could result in fines and other legal actions. Identifying data integrity violations and understanding how they can impact a business is the first step towards using data effectively in any organization and towards a real reduction in the total cost of risk.
Quality Claim Adjusters
One of the most important factors usually overlooked by risk managers is the quality of the claims adjuster. Although every claims administrator will tout the quality of its employees, its performance must be evaluated. By having a healthy working relationship with a TPA, risk managers can constantly communicate performance feedback. Annual best practice audits also can help determine if claim adjusters are giving the proper attention to claims. Additionally, risk managers should urge their TPAs to invest in their employees’ continuous education and internally audit their staff. A claims adjuster has the ability to greatly influence the ultimate cost of an open claim in addition to determining the timetable of an injured employee’s safe return to work.
Data Quality
Risk managers should expect their TPA to provide high quality data, free of errors. Though this may sound obvious, inaccurate data will derail benchmarking and predictive modeling efforts and offer a false image of an organization’s workers’ compensation program. Bad data has been estimated to cost as much as 15% to 25% of an organization’s operating budget, so vendor oversight is imperative.
In addition, organizations should work with their TPA to ensure that their data is portable, so that it can be moved from carrier to carrier, not locked into a vendor’s system for the foreseeable future or require larger fees to be released.
By working closely and collaboratively with their TPAs to continuously improve their processes with the goal of improving claims outcomes, risk managers will be best positioned to achieve program efficiencies and positive results.
About Charles Martin
Charlie Martin, located in Norwalk, is Marsh Risk Consulting’s Casualty Consulting Practices Leader, overseeing and directing the daily operations, growth, and innovative service offerings of the group. Working in partnership with Marsh’s Workers’ Compensation Center of Excellence and in support of MPACTSM , Marsh’s holistic approach to reducing total cost of risk, Charlie also provides leadership and advisory expertise to clients seeking support with their pre- and post-loss issues, assisting them in identifying, analyzing, and reducing their cost of retained risk.
He has held various senior level claim assignments within Marsh and has extensive multi-line claim experience having been with a major insurer for many years prior to joining Marsh.
About Marsh
Marsh is a global leader in insurance broking and risk management. We help clients succeed by defining, designing, and delivering innovative industry-specific solutions that help them effectively manage risk. We have approximately 27,000 colleagues working together to serve clients in more than 100 countries. Marsh is a wholly owned subsidiary of Marsh & McLennan Companies (NYSE: MMC), a global professional services firm offering clients advice and solutions in the areas of risk, strategy, and human capital.