The following is an opinion piece written by Vince Venturella, product manager, Wolters Kluwer ELM Solutions. The views expressed within the article are not necessarily reflective of those of Insurance Business.
With more insurance claims than ever being processed today, it takes more money and time to manage all the data that arises from them. But if used correctly, data are a solution, not a problem.
Data analytics can help claims departments and corporate legal departments (CLDs) make more informed decisions when it comes to litigation and claims management. Thanks to more mature machine learning technologies, unstructured data sets can be mined and used to uncover complex patterns and trends that were previously undetected. Data can also serve as a common language between teams. In turn, data can help claims managers and corporate legal teams get a better handle on the costs of insurance litigation and the outcomes of claims across categories.
Claims growth offers the perfect opportunity for analytics
The number of insurance claims being processed has grown for two main reasons. For one, claims have simply grown in proportion to the number of policies that exist. Additionally, in the past 10 years, underwriters have increased their ability to leverage big data to generate very precise algorithms for pricing individual policies. Thus, they are able to insure more people - particularly more high-risk people who are naturally going to have more claims. The risks involved with insuring this group are not bad, provided that the insurance has been priced properly.
High-impact litigated claims offer some of the greatest opportunities for data analytics to improve outcomes. Imagine a single liability claim worth $5 million or $6 million in damages. You can buy a lot of new cars for that amount. CLDs and claims departments can mine data to know the answers to several important questions that can change the course of future claims, such as:
- Did I settle for the right amount?
- Did I use the right law firm?
- Could a shorter time to settlement have resulted in a significantly lower cost of litigation?
- Did the agreed upon staff within my outside counsel firm work on this claim and, if not, did that impact the outcome or cost?