Controlling the Cost of Risk With Claims Guidance: ITC 2022 Presentation Recap

To kick off EvolutionIQ’s panel discussion at InsureTech Connect 2022, our COO and co-founder Michael Saltzman gave an overview of why claims guidance software has rapidly become such a critical part of the carrier ecosystem today – and why the opportunities are unlike what they’ve been in the past. 

“The last decades have been focused on optimizing underwriting (premiums) and optimizing expenses (operations),” Mike told the ITC audience assembled in Las Vegas. “We’re here to tell you that claims deserve as much of a look as the other sections have previously. Claims once was the back office. That made sense. There were piles of unstructured data, complexity – everything that made the adjuster/examiner job hard also made it even more difficult to actually change the outcomes of claims…. As such, there was a tension between risk management – paying the right claims and controlling claim costs – and throughput – actually getting to the caseloads as they came in.”

Further exacerbating the tension, Mike explained, is that caseloads have been growing for years – with COVID` accelerating that dynamic – and the entire industry is simultaneously dealing with tenure issues, difficulty in hiring skilled examiners and adjusters, and difficulty upskilling junior ones. The result was that simply “keeping up really was the primary goal” for most claims departments.

“Today, it’s the opposite. Today, claims is the largest opportunity going forward in our view. What was a liability – all of these piles of unstructured data, all of that complexity, everything that made these claims adjuster jobs hard — that is now an asset. That is now something to be used to risk-manage and to control claims costs. What was in tension is now in unison. We can actually improve capacities. We can get more claims through the process and risk-manage better by focusing human expert time – examiner and adjuster time, senior specialist time – where they can have the biggest impact and value.”

For those not familiar with how claims guidance software works, Mike gave a brief rundown of the technology.

“We’re the leader in this space and the way we think about it is four main pieces,” he explained. “First is comprehensive claims data intake. It is no longer sufficient to focus on structured data. It is no longer sufficient to focus on what you get at claims intake. You have to be using the entire nuance of unstructured data – correspondence, emails, phone call transcripts – all of that is gold that has to be used in a claims guidance approach.”

“Second is models that run continuously,” he said. “We don’t want to hear about, ‘I’m running a model on Day Zero. I’m running another model on Day 15 and then on Day 45.’ Claims guidance sits side-by-side with examiners and adjusters and it runs continuously. Any time an examiner is working a claim, the claims guidance software – just like radar – should be sitting right next to them.”

The third piece of claims guidance is “claims synthesis,” Mike explained. “A guidance system is not just a flag. It’s not just an alert. It’s a synthesis of the claim that cuts through complexity and gives an adjuster a sense of where they should be taking the claim.”

“The last piece is automation and straight-through processing,” he said, noting that one of the ways carriers can now manage bigger caseloads and achieve larger efficiencies is by increased focus. “Claims that can be automated, that can be paid, that can be straight-through processed – let’s do that in real time. That’s not always evident at Day Zero. Sometimes a claim becomes automatable at Day 11 and that’s why we want to have that recurring model running.”

Taken together, “this offers the most attractive ROI in claims organizations today and really across the entire carrier ecosystem,” he said. “This was a new concept 3 or 4 years ago. It’s now proven at multiple carriers across different lines of business, with major case studies to prove it out…. This is all about claim costs. The total cost to the program. This is not just about expenses. This is not just about efficiency. We actually can control the cost of risk by allocating adjuster and examiner time more effectively.”

Watch the full presentation followed by the panel discussion 

Read more about EvolutionIQ at ITC 2022 in our other articles


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