Claims departments are being asked to do more with less today, but are not benefitting from the data and analytics investments insurers are making in their application and underwriting processes.
A white paper by LexisNexis says, historically, data and analytics investments on the claims side have been largely limited to special investigative units charged with identifying fraud.
Not surprisingly, data does make a difference in claims settlements, LexisNexis says. Its white paper looked at 400,000 third-party bodily injury features and 1.8 million property-damage features from 20 top personal-auto carriers. The features were then segmented by the availability of certain data elements "immediately after completing the claim reporting process and before assignment."
For third-party bodily injury claims, average indemnity paid for claims with more data, defined as a telephone number and two or more data elements (such as name, address, plate/state or vehicle identification number), was 25% less than for claims with less data, defined as a telephone number and only one additional data element ($5,529 average for claims with more data versus $7,359 for claims with less). Average expenses paid were 47% lower for claims with more data ($274 versus $519 for claims with less data), average attorney-representation rate was 25% lower, and average cycle time for claims with more data was 100 days versus 116 days for claims with less data.
LexisNexis says, "To address concerns that the less-data claims were more complex—and therefore more likely to involve an attorney—we also examined only the claims involving attorney representation."
In those cases, the white paper says average payments in the more-data group were 16% lower and cycle times 6% shorter.
For property-damage claims, average indemnity paid was $2,563 for claims with more data, and $2,920 for claims with less data, a difference of 12%. Average cycle time was 35 days for claims with more data versus 41 days for claims with less data, a 15% difference.
"By incorporating more data into the claims process—and earlier in the claims process, ideally at first notice of loss—carriers can improve efficiency, reduce losses and increase customer satisfaction," LexisNexis says.
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