Last month, I was joined by my colleague Deb Zawisza and a panel of insurance leaders for Novarica’s latest Workers’ Compensation Special Interest Group. The conversation touched on innovation in workers’ compensation, InsureTech, and core systems transformation.
Our panelists Mike Paulin of AF Group and Jeff Shaw of Employers Insurance Group offered a wide range of approaches, techniques, and lessons learned from their experiences within workers’ compensation organizations.
Innovation in Workers’ Compensation
In 2020, carriers prioritized cost control. There was a focus on using AI, machine learning, and analytics to identify claims that might be expensive without proactive intervention, to triage more complex claims, and to proactively identify fraud. In 2021, carriers continue to focus on cost control, but they are also prioritizing areas including business intelligence, rating, and distribution. Predictive analytics tools are becoming more popular. Carriers are starting with data quality initiatives; looking at data warehousing, operational data stores, and appropriate data marts; and overlaying business intelligence tools.
While migration to a fully cloud environment brought about cost savings and agility gains for one insurer, both panelists had recent successes in deploying policyholder-facing technologies for more direct interaction with prospects and injured workers. One participant emphasized that demographic changes and consumer expectations for digital shopping mean that user experience will become increasingly important for workers’ compensation insurers.
Advances in digital loss control, claims processing, and injured worker portals have also had a big impact on customer satisfaction. One panelist discussed their IT innovation initiative of innovating at your desk. He explained that RPA tools had been applied to IT business processes, resulting in a 2% reduction in IT operational expenses.
As always, a common theme in the discussion was the organizational importance of remaining flexible, emphasizing the “need to embrace change.”
InsureTech Landscape
COVID-19 has changed insurer investment and innovation priorities; many are focused on short-term, tactical investments to produce more immediate results. Many insurers are working with technology partners to deliver quick hits around process gaps that were exposed during the COVID crisis, such as digital payments, paperless, e-signature, and digital inspections. One panelist was engaged in a wearables effort as well as joint ventures with a few different capabilities provides. Some startups are focused on big data analytics tools, AI, and data aggregation, which offer insurers new ways to access and analyze information. These data and analytics tools can help supplement and enhance existing data-based models.
Core Systems Transformation
Carriers are upgrading their policy admin systems to gain operational efficiencies and flexibility in how they add data. They are using business rules to manage workflow and predictive analytics to build pricing models. This improves risk selection and risk pricing while reducing operating expenses. One participant explained the importance of simplifying or altogether avoiding data conversion whenever possible as it has proven difficult for his organization.
The SIG concluded with a discussion about gig-based insurance, self-service, and on-demand insurance, which will be an important component in the future of worker’s compensation insurance.
We look forward to revisiting these topics in a few months. If you’re interested in joining us on July 29, please email Aite-Novarica Events.
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