Insurers Could See 25% Decrease in Claims Severity by Utilizing Data Early

A recently released LexisNexis Risk Solutions’ study found that carriers that incorporate real time data analytics into the claims process at first notice of loss can more accurately and consistently triage claims, identify potentially fraudulent files and capitalize on subrogation opportunities. In addition, claims are likely to be resolved more quickly with lower overall costs and increased customer satisfaction.

The study examined more than 10 million features from A.M. Best’s top 20 carriers. The study authors noted that data and analytics have been incorporated into underwriting and special investigation unit functions, but not yet in claims.

Collecting more data up front allows carriers to provide claims adjusters with as complete a file as possible, reducing the need for an adjuster to chase down information.

The study divided claims reporting data elements into two categories: Less data features included a telephone number and one additional data element, such as a name or address, license plate number or vehicle identification number. More data features included a telephone number and two or more additional data elements.

In examining the impact of more data on third party bodily injury claims, the study found that the average indemnity claim with less data cost $7,359 while a claim with more data cost $5,529 – 25 percent less. The study also found a 47 percent savings on average expenses paid where more data was obtained at the onset of a claim.

The study found that using more data earlier resulted in:

• 15-25 percent lower severity payments for third party bodily injury settlements.

• 25-49 percent lower attorney involvement for third party bodily injury settlements.

• 5-15 percent shorter cycle times for third party bodily injury settlements.

• 10-15 percent lower severity payments for third party property damage claims.

• 8-15 percent shorter cycle times for third party property damage claims.

The overall impact of incorporating data and analytics into a carrier’s claims function could result in millions in saving, according to the authors.

As a result of the study findings, LexisNexis recommends carriers use data and analytics as an operational tool first and as an investigatory tool second.

Source: LexisNexis