This article first appeared in the Winter 2015 issue of OnWindows.
Insurers have faced plenty of challenges in recent years, but opportunities are emerging for those who are ready to take them. “Against a backdrop of soft markets, competitive issues and low interest rates, today’s general insurers are focusing on claims to reduce their loss ratios,” says Tony Jacob, managing director of worldwide insurance at Microsoft. “They’re finding new ways to improve the claims experience for policyholders, and exploring how to improve their claims analytics capabilities to optimise processing, mitigate losses and identify fraudulent activity.”
In today’s highly competitive environment the insurer who helps a claimant quickly get back to normal stands to deliver customer satisfaction and build loyalty. “Whether it’s flexibility to initiate and track a claim through a customer’s preferred communication channel or improving operational efficiencies, insurers need to be able to engage, process and resolve claims quickly and accurately,” says Patti Griffin, global product lead at Accenture Duck Creek. “Key to achieving this is to automate what can be automated, and streamline what cannot be automated to make it more efficient.”
Rising to these challenges can make a big difference to the bottom line, even without increasing the number of customers. “A combination of risk and fraud prevention in the underwriting process with real-time fraud detection and analytics in claims can improve the combined ratio up to 5%,” says Christian van Leeuwen, CTO at Microsoft Gold partner FRISS.
“On average, claims expenses are 60-80% of any carrier’s overall expenses,” says Ben Moreland, VP data and analytics at Innovation Group. “Even a 1% decrease in claims expenses can be greater than a 5% improvement in another area.”
Microsoft and its partners are enabling insurers to deliver differentiating service to customers while generating the insights essential for proactive business. Examples include Insuresoft’s Diamond Claims, which is available as a stand-alone solution or as part of its policy processing suite and complemented by its Diamond Mobile application. The system is fully integrated with SQL Server Reporting Services and can be deployed through the Microsoft Azure cloud, enabling it to scale and adapt to the changing needs of clients. “We provide a powerful rules engine that enables our customers to create work plans for their claims staff and measure key performance indicators in real time,” says Linde Wolff, product manager at Insuresoft. “This is a game-changer for our customers because it enables them not only to identify areas where they need to improve, but also to update their rules to instantly drive that change.”
As more insurers connect siloed data to achieve operational efficiency, powerful analytics capabilities, combined with the scalability of the cloud, are enabling them to turn that data into insights. “By replicating the claims data from the claims system to SQL Server, customers can gain greater access to that data, and analyse and visualise it more effectively using self-serve BI technologies such as PowerView and Power BI,” explains Jacob.
Duck Creek Claims provides automation and streamlining for claims processing as well as reporting capabilities built using Microsoft’s SQL Server Reporting Services, Integration Services, Analysis Services and SharePoint, which can be used in conjunction with Microsoft Power Pivot and Power BI. The solution enables an optimised work management experience for claims staff. Instant messaging, a discussion-thread view of file notes and the ability to email from within the claim file enable collaboration for claims adjusters, while insurers can use codeless configuration to introduce their own processes and quickly adapt to changing market demands. In addition to on-premise deployment, the suite is also supported through the Microsoft Azure cloud, enabling stunningly fast implementations: Pacific Specialty Insurance Company completed the first phase of its deployment in less than seven months, and Berkshire Hathaway deployed in two months. “Our customers are able to condense the implementation timeline so they can quickly start using the software in the market,” says Griffin.
“For a carrier, it is vital to be able not only to settle claims quickly, but also to quickly identify claims leakages or fraud and react in the best manner,” says Moreland. “This requires an analytics solution that puts trusted, current analyses at the fingertips of business users who are empowered to explore their data for greater insights, and share with colleagues who can also fully trust the data and recommendations. Through collaboration between Innovation Group and Microsoft, Insurer Analytics is able to scale to meet the ever-growing data volume demands and performance expectations of carriers, as well as help carriers position themselves for the increasingly competitive insurance landscape.”
FRISS is 100% focused on the insurance industry, with more implementations of anti-fraud solutions than any other vendor in Europe. The company is dedicated to improving indicators and models, predictive modelling, text mining, image screening, social network analysis and social media, enabling insurers to stay protected from new fraud schemes. Jeroen Morrenhof, CEO of FRISS, notes a clear rise in the use of analytics by insurers wanting to prevent fraud. “This is necessitated by combined ratios and losses under serious pressure, and the need for continuous improvement in claims processes,” he says. “In order to find not only the fraudsters of today, but also those of tomorrow, insurers need to continuously improve their detection engine, indicators and predictive models to make sure they identify new patterns as they emerge.”
Worldwide studies have found that 5-10% of claims are likely fraudulent, leading forward-looking insurers to take a proactive approach to addressing the issue. For example, Folksam, one of the largest insurers in Sweden, expects to deliver 15-20% more suspicious claim cases for investigation after implementing the FRISS solution for Fraud Detection at Claims including FRISS Analytics. “The solution enables Folksam to improve its loss ratio by increasing the chances of detecting fraud, and to minimise false positives” says Morrenhof. “These results have been proven through our track record with all FRISS customers in 12 countries.”
Looking ahead, increasingly advanced analytics capabilities will be required as the volume and types of data available for analysis continue to grow. Towers Watson is working with leading insurers to help them improve their claims performance and gain competitive advantage. “Our claims specialists are helping to identify areas in which insurers can optimise their performance on claims costs,” says Tom Helm, head of claims consulting, risk consulting and software at Towers Watson. “We are deploying our analytics, software and claims capabilities together to help our clients fully understand their current state with regard to claims analytics and supporting them in determining the key questions their future analytics capability needs to answer. We are working with them to set out the data, tools, skills and outputs required to achieve these goals as well as helping them with the delivery.”
Microsoft and its partners are poised to deliver the capabilities insurers need to ensure fast, cost effective claims handling and analytics. “We’re now entering a new area of advanced analytics with our insurance customers as we integrate the Revolution R analytics solution with SQL Server 2016 and Azure Machine Learning,” concludes Jacob. “As well as enabling insurance companies to better mine and analyse their claims data, this delivers the capability to consume huge amounts of data to simulate and model catastrophes such as cyclones, hurricanes, floods, earthquakes and terrorist activities. Giving insurance carriers a single capability that could improve both loss ratios today and catastrophe modelling for tomorrow is very powerful.”