As traditional auto insurers compete against each other for customers, they’re now facing competition from new entrants in the auto insurance market. Some car manufacturers have begun offering insurance coverage that responds to the modern technology of today’s cars.
How can car manufacturers offer discounted premiums compared to large, sophisticated, and specialized insurance experts? Unlike the car industry, insurance rate calculations are a complex actuarial estimate of future costs, not an aggregation of known, fixed costs. The most consistently profitable insurance companies are the ones that excel at the advancement and refined use of technology and data analytics in underwriting, ratemaking, and claims handling.
Still, there are many ways car manufacturers may have an advantage over incumbent insurers. In this article, Milliman’s Elizabeth Bart examines the different elements that insurance premiums cover and how each could be reduced.
COVID-19 requires companies with
self-insured or high-deductible programs to take a new look at their
operations, which may vastly reshape their risk profiles. The degree to which
risk managers can come to new understandings of their changing exposure levels
could have significant effects on current and future liability estimates.
Estimating outstanding claim
liabilities for a self-insured or large deductible program depends heavily on the
exposure levels for the present and recent past. A change in operations alters
a company’s risk profile and can have a significant impact on reserving and
loss projections for the next quarter or year. The larger the change in
operations, the greater the impact on a company’s exposures and claim reserves.
In today’s climate, it is extremely
important to make sure exposure estimates reflect the latest information
available and that any changes in operations have been clearly communicated.
Likewise, when life returns to normal, it will be important to frequently
monitor the resulting increases in exposure levels.
In this article, Milliman’s David Lang explains why estimating the new exposure levels is likely to be difficult for many risk managers.
It is relatively easy to ascertain whether an injury is
work-related—the injury must arise out of and in the course of doing your job.
However, what if you get sick or an illness at work? Is it possible that
illness or disease could be work-related, too? If the illness makes a
preexisting condition worse, would that also be work-related? The COVID-19
pandemic is raising many questions regarding what is a compensable workers’
In some states, specific conditions are listed in the workers’ compensation statutes as being “occupational diseases.” This means that the disease is likely to have been contracted by an employee in the course of certain employment. That is, the specified disease is presumed to be a result of exposure at work to the causative agent. Generally, an “ordinary disease” of life or a disease that the public is exposed to as part of everyday life is not considered an occupational disease.
Milliman consultants Adam Blais and Christine Fleming explore several issues regarding compensable workers’ compensation claims in light of the coronavirus pandemic in their article “If you contract COVID-19 at work, is that a compensable workers’ compensation claim?”
Identifying workers’ compensation claims with potentially high costs—before those costs have developed—has, for the most part, eluded insurance and self-insured companies, even though they pay more than $60 billion in workers’ compensation benefits every year. Over 80% of all workers’ compensation costs come from a small number of unpredictable, high-cost claims. Conversely, lower-cost med-only claims account for 75% of total claims but only 5% of the cost.
These hard facts are the claims reality that insurers and self-insurers like the Intergovernmental Risk Management Agency (IRMA) face daily. Focused on improving performance and reducing costs for its 70-plus members organization, the Chicago-area member-owned public risk pool had been looking for a way to increase efficiency regarding workers’ compensation losses while improving accident prevention and claims responses for its members’ workforces.
A major challenge to peeling back the mystery in its “unknown high-cost claims” was finding a way to access the predictive data in adjusters’ notes, case manager notes, and other sources of text data. This unstructured, free-form data could provide an early warning of potentially costly claims, but requires claims managers to read through reams of adjusters’ notes. This manual process typically delays identification of potentially problematic claims and the assignment of appropriate resources, and, given the glut of material to sift through, can lead to hit-or-miss results.
In this case study written by Michael Paczolt, learn how Nodal™, Milliman’s web-based predictive modeling and decision-support system, sped up the process and accurately identified 95% of high-cost claims for IRMA before they happened, reducing costs by over 15%.
In the trucking industry, there has been greater reliance on shipping items across U.S. roadways, which has significantly increased demand and miles driven. As smaller companies grow to meet this demand, though, their claims departments have often struggled to maintain consistent incurred loss-per-mile-driven results. And the trucking industry has long been subject to escalating claims costs by claimants who see these companies as a “deep pocket.” These claim trends complicate profit and loss (P&L) projections, and some claims departments that in the past silently delivered adequate results have now become a black eye on the P&L. The good news is that there are options available to combat this deterioration of results.
As leadership teams struggle with managing this challenge, several insurtech opportunities offer promise. New advances in technology coupled with claims optimization approaches bring the promise of reduced incurred loss costs, streamlined efficiency, and increased profitability. Trucking companies that have experienced growth over the last few years face several challenges at once: optimizing claims departments, scaling for growth, and integrating technology enhancements to control losses.
As the industry evolves and trucking companies integrate new technology into their claims systems, savings can be realized on both the indemnity payment and expense payment side of the equation. In this article, Milliman consultant Nina Plail explores how the trucking industry is using new technology to stay ahead.
To learn more about how insurtech is transforming claims management in the trucking industry, listen to this Critical Point episode featuring Nina and Christine Fleming.
In this episode of Critical Point, Milliman’s Christine Fleming and Nina Plail discuss how insurtech is transforming claims management in the trucking industry for both companies and consumers.
To listen to the entire podcast, click here.