battles. The car hitting the tree analysis
mentioned above doesn’t just help you
estimate loss reserves; it can also help you
tap the adjuster with just the right level
of experience to handle that claim early
That crude method can be replaced with
a key performance indicator system that
measures adjuster performance based on
customer satisfaction, overridden claims
settlements, and other related metrics.
AM Best reported that in 2011, loss ratios for the
top 50 auto insurers jumped to the highest level in at
least 11 years. But simply increasing rates is a short-term fix in a highly competitive marketplace.
on. More complex and severe cases can
be assigned to the most qualified adjusters, while low-exposure claims can be
channeled to less-experienced adjusters.
In some cases, analytics can even recommend cases that should be automatically
adjudicated and settled.
Analytics can also be employed by
claims managers to measure the effectiveness of the claims handling process—in
particular, adjuster efficiency. Traditionally, adjuster productivity had been based
on whether an adjuster closed more claims
than were opened in a reporting period.
On the legal front, we’ve all heard the
stories where an insurer ended up shell-
ing out $200,000 over a broken finger.
Predictive analytics can quickly deter-
mine which claims are likely to result
in litigation (such as when the claimant
has hired an attorney) and assign those
claims to more senior adjusters, who
should be able to settle the claims sooner
and for lower amounts. Analytics can also
adjust loss reserves by scoring the sever-
ity of the claim, taking into consideration
the type of lawyer involved in the case. In
addition, analytics can help insurers look
for patterns in claims that involve litiga-
tion—comparing the data on previous
cases that led to litigation against the raw
data coming in on new claims. This com-
parison might lead to new, cost-saving
strategies in coping with litigation.
Stuart Rose, global insurance marketing
manager at SaS, began his career as an
actuary and has more than 20 years of
experience in the insurance industry. Rose
has worked for a variety of financial services companies and software vendors in
the United States, europe, and South africa.