Mike Bruton, Chief Product Officer, DocLens.ai
The rapid rise in Social Inflation is a critical challenge to any organization with exposure to lawsuits involving bodily injuries. While factors at the macro (society-wide) level contribute to the increase, claim portfolio managers must focus on the factors at the micro (claim) level to improve outcomes. Experienced claim portfolio managers can identify the micro level factors and the strategy for addressing the challenge. Advances in technology can improve execution of the strategy driving improved outcomes.
Unlock the Unstructured Data in Pending Claims
A successful strategy requires early identification of the claims that have a higher risk of an outcome impacted by Social Inflation. Executing that strategy requires an investment in resources to gather and then to review all data as rapidly continuously and thoroughly as possible. As the volume of data related to a claim increases, technology can help focus the review. Technology can search for and extract from structured and unstructured data pre-defined key claim characteristics that can lead to anger or sympathy, for example traumatic brain injury, complete spinal cord injury, prior incidents or violation of policies or procedures. The dictionary of terms can be customized to fit a portfolio and AI can correlate the relationship between terms and outcomes. Similarly, technology can identify the venue, or most likely venue in a pre-litigation phase as well as the attorney involved. Displaying the key factors in a claim in transparent AI allows claim professionals to focus time on gathering data, reduces inefficiency if a file transfers and provides meaningful information to internal business partners such as underwriters and actuaries. Unlocking the data in unstructured notes, emails, forms, reports, and other documents will significantly improve execution on the early identification of risk.
Apply a Consistent Risk Framework
A successful strategy requires consistent analysis of the data. Specific factors, in a particular venue with certain attorneys involved may create a higher risk. Highly experienced claim professionals armed with the data will recognize this risk but a staffing model that relies entirely on highly experienced claim professionals to manage all claims is not efficient. Technology can deliver a consistent and continuous risk analysis of the factors found in a claim and automatically escalate those claims with the highest risk as soon as the risk can be detected in the data. Moreover, technology can provide reminders on the specific actions that the claim professionals should considered if a factor is present in a claim file. For example, assigning counsel or other experts that have prior experience with the specific claim characteristics, venue or attorney involved. Using technology to analyze the risk, reduces the potential for a lag in the accurate analysis.
Insights from Third-Party Data
A successful strategy requires robust data analytics beyond what can be provided by internal experience alone. Technology can incorporate into the risk framework and regularly update insights gleaned from third-party data. For example, data aggregators harvest outcome data from courts throughout the country. This data will be more current than the more limited jury outcome data generated internally. The legislative and judicial climate, demographic characteristics and impact of attorney advertising can evolve in a particular venue. A risk framework influenced by third-party data can evolve with those changes and provide more meaningful insights for the risk in a pending inventory. Finally, insights gleaned form the experience of other claim portfolio managers can be incorporated into a technology driven risk framework and used for relative benchmarking.
Metrics For Pending Claims
A successful strategy requires the ability to measure risk in the pending portfolio. To reduce the risk of Social Inflation intervention must occur before the claim is resolved. Claim portfolio managers typically utilize lagging outcome-based metrics but few metrics focused on the pending inventory. Technology can provide a dashboard that shows point in time and trended risk analysis in a pending portfolio, including the direction of risk associated with specific factors. Is the portfolio-wide risk rooted in specific claim characteristics, venues, or the involvement of attorneys? A clear understanding of what drives the risk, and the direction provides data that can be used to reduce the exposure to those factors.
Technology can improve execution of the strategies that reduce the impact of Social Inflation. Claim portfolio managers cannot ignore the opportunity that technology offers. Claim portfolio managers should invest to unlocking structured data, develop a consistent risk framework, acquire, and update insights from third-party data and generate meaningful metrics on pending claims.
Explore the ClaimLens product to accelerate the cost-effective technology solution to reduce the impact of Social Inflation.
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