New strategies for process management of P&C claims | Insurance blog

1. Process strategy: advanced analytics and AI-powered decision support

In recent years, the insurance industry has experienced significant change driven by the explosion in data availability and data migration to the cloud. This transition has allowed network operators to easily access and combine data sources, including third-party information. As a result, insurance companies have assembled new teams of claims experts and data experts dedicated to generating insights and unlocking value from their data. This leads to improvements in the resolution of disputed claims and changes in the claims processing model.

In particular, the use of AI has been instrumental in understanding the expected costs and complexity of each case and facilitating the creation of efficient process plans and budgets based on combinatorial insights from internal and external data sources. By providing a clear resolution path, carriers can optimize litigation costs while ensuring more accurate settlements.

Other important use cases include:

Plaintiff attorney profiles: By analyzing historical data, carriers can identify patterns of behavior among plaintiffs who frequently file lawsuits against insureds. This information can help insurance carriers better understand the motivations and strategies of these attorneys and ultimately help develop more effective defense and negotiation strategies.

Strategic positioning: Carriers can use internal and external data sources to create a comprehensive overview of each case, including information about the parties involved, the venue, the type of case, and other relevant factors. This “single-pane-of-glass” approach can influence decision-making and improve collaboration between attorneys and adjusters, leading to better outcomes.

Leveraging the aforementioned Litigation Analytic Record (LAR) to understand the relative size and scope of a panel law firm, as well as the ability to review historical case results, is critical when assigning cases. By leveraging attorney performance data, insurance carriers can adjust the complexity of a case to achieve the best overall results for the claim through a tailored attorney selection tool or framework. Additionally, visibility into the number of cases assigned to each firm can help carriers optimize the mix of open matters by complexity to maximize the performance of their panel firms and attorneys.

In the past, the appointment of counsel was often based on claims adjusters’ relationships with attorneys or on the recommendations of their superiors. However, developing attorney selection tools and frameworks that guide the adjuster’s influence in assigning attorneys based on data and analytics may be a more strategic approach.

Insurance C-suite executives are under increasing pressure to understand how large spends support strategic imperatives, particularly on line items with significant financial impact, such as: B. Costs for external defense counsel. The top 50 carriers spent an average of $500 million on litigation costs in 2022, with outside counsel fees typically accounting for 80-90% of those costs, depending on their business base, litigation strategy and in-house legal capabilities.

However, chief claims officers often need more clarity on the overall results they are achieving with these significant expenses by focusing on both the litigation costs and the compensation associated with these cases.

Leading insurance carriers are using data-driven solutions to gain insight into attorney performance to optimize legal spend. By combining claims record metadata with legal management and billing system data, carriers can identify high-performing attorneys, ensure compliance with carrier policies, and streamline their legal board to provide powerful resources.

Carriers typically begin by creating a blended scorecard that combines these different data sources to provide a single source of truth that illuminates the performance of law firms and attorneys based on the results delivered.

A strong legal body is critical to effectively defending insureds when making a claim, particularly for commercial insurance companies. Some carriers have successfully highlighted to brokers and agents the strength of their claims operations and instilled confidence in their ability to provide value beyond the insurance price when needed.

Key use cases include:

Advanced case monitoring and escalation paths

Carriers can leverage event-based triggers and expense tracking to monitor case progress against historical benchmarks provided in the Litigation Analytic Record. This allows them to make proactive decisions about escalating cases and allocating resources at the claims level, promoting an activist approach to managing claims files. Automated management escalations triggered by reported changes in entitlement profiles and spend discrepancies provide improved visibility into outstanding dossiers, enabling frontline managers to effectively focus their time on their teams. Network operators with high-quality data hygiene have taken further steps that allow them to proactively edit individual files before they deviate from the optimal path, resulting in better results.

Adherence to process plans and budgets

Inaccurate budgets can lead to poor reservation practices, especially among carriers who lack visibility into the quality of budgets provided by their consultants. Issue and event-based triggers derived from the Litigation Analytics Record provide insight into cases that deviate from their original litigation plans and budgets. These event-based triggers help frontline employees and managers stay on top of when budget changes, spending forecasts, or task counts deviate from expectations. Changes to these event-based triggers can lead to proactive realignment of litigation strategies based on developments in the file. For example, if a claim is initially classified as “lower complexity” but exceeds 75% of budget faster than the benchmark, the adjuster may take remedial action or work with an attorney to rethink the litigation strategy for the file.

Mixed scorecard for panel evaluation and ranking

Many carriers distribute cases unevenly across panels, often handling 80% of cases and paid losses by national companies operating in multiple divisions and states. Leading insurance companies use blended scorecards that not only evaluate the performance of law firms and individual attorneys based on claim types, but also measure compliance with their operating policies to improve overall results. By matching claims cohorts with historical claims results by attorney and firm, carriers can differentiate their top performers from the rest of the panel (or in-house attorneys). At the same time, the allocation of the most challenging cases and the best hourly rates to the best performing firms and lawyers is optimized to ensure that their proven expertise is used where it has the greatest impact. This strategic shift towards evidence-based panel management optimizes the use of resources and continually improves the overall results in claims cases.