By Kirstin Marr, President, Valen Analytics
The emergence of new data sources continues to drive the evolution of the workers’ compensation industry. While the sector certainly is changing — due to the availability of several data-driven underwriting resources — there’s one massive obstacle limiting its potential: the data itself.
Comparing the cost of data to the value of data is incredibly difficult. Analytics isn’t easy, particularly when working with dated technologies and limited resources.
Despite these hurdles, data is too significant an asset for workers’ compensation insurers to ignore. With the right approach, the benefits far outweigh the drawbacks.
Higher Efficiency Leads to Lower Costs
An ISO Claims Partners study found that 5% of workers’ compensation claims account for 80% of costs. What’s causing all this spending? Unpredictability.
It’s difficult for adjusters to anticipate the severity of a claim accurately. Claims sometimes start simple and stay that way; in other cases, they start benign and take unexpectedly bad turns.
A warehouse employee might suffer a seemingly minor cut to the hand that develops an infection, causing him to lose that hand and miss several days — or weeks — of work. If that employee were to sue his employer for damages, a long and drawn-out settlement could yield unexpected and exorbitant legal costs.
When these occurrences become difficult to forecast, they become difficult to contain. Sophisticated analytics, powered by a deep well of detailed transactional data, can help adjusters by providing insights that enable them to get ahead of potentially severe situations. By considering additional factors that can affect recovery, data-driven insights can help adjusters change the course of a claim. Thanks to data, that employee with the cut hand might be assigned a case manager to coordinate care for the injury and keep it from worsening.
Along with improvements to claimant outcomes, data helps fuel the automation and process enhancements that insurers need to make quicker, more accurate decisions. Straight-through processing, for instance, uses data to inform business rules and workflows that let clerical workers handle routine tasks, liberating seasoned adjusters and underwriters to focus on more complex claims and policies.
With the availability of free weather, social, and satellite data platforms, underwriters can cull invaluable insights without sizable financial investment. Rather than rely on data aggregators, underwriters can use nontraditional data sources to paint a more robust picture of a business. For example, garnering a sentiment on a business courtesy of Yelp.
Allstate is one such insurer already leveraging social media data to power fraud detection. The company performs a comprehensive social media search to unearth information that could confirm or deny a claim. With this approach, Allstate expedites the claims process without sacrificing accuracy, providing a customer-friendly and cost-effective claims solution.
Enabling Success in Small Commercial
A combination of data and automation helps insurers in the small commercial market streamline their processes. Thanks to automation, insurers can drastically reduce their human interactions and accelerate underwriting and claims processing. These improvements to internal processes are the cornerstone of heightened transparency and ease of doing business in this market.
The small commercial market is highly desirable, but customer experiences have failed to align with customer expectations. This disconnect occurs, in large part, because of the inability to properly evaluate risk due to missing data. When previous losses aren’t documented or accounted for, insurers struggle to quantify how much risk customers present and how they can best serve them.
An extensive data pool allows insurers to compare those policies with no-loss information against similar policies to make an informed assessment of the risk quality. Armed with this insight, insurers in the small commercial market can focus on optimizing other parts of the customer experience and growing market share.
Data-powered underwriting and claims handling enable workers’ compensation insurers to strike a balance between human expertise and automation. It also improves digital customer experiences in significant ways, which is important for conquering the small commercial market. Put simply, data is a win-win for everyone involved in workers’ compensation.
About Kirstin Marr
Kirstin Marr is the president of Valen Analytics, an Insurity company, and provider of proprietary data, analytics and predictive modeling for property and casualty insurers. Prior to her role as president, Kirstin was the chief marketing officer of the company, and one of the pioneers of the Insurance Careers Movement coalition, a grassroots initiative of more than 1,000 insurance organizations raising awareness of what insurance has to offer Millennials. Previous to Valen, Kirstin ran B2B marketing for internet technology pioneer and market leader, ServiceMagic.com (now HomeAdvisor). Kirstin has a passion for building companies that invent leading-edge technologies to improve customers’ lives and solve the inefficiencies that exist in traditional marketplaces.