Aite-Novarica Group’s Three Levers of Value framework proposes three ways insurers can create value. First, insurers can sell more. They can do so by expanding the market, serving new segments, and generating or targeting demand for products. They can also introduce new products, improve speed to market, improve brand favorability, offer better services, and engineer positive customer experiences. The latter drives loyalty, which can improve renewal rates.
Second, they can manage risk better by improving pricing and risk selection using third-party data, predictive scoring, and advanced analytics in underwriting and claims. Third, they can cost less to operate by improving productivity and creating operational efficiencies via automation, digitization, and eliminating redundancies. The Three Levers gain greater urgency in a challenging economic environment with higher loss costs.
Property/casualty insurers have recently pursued the second lever, managing risk better, by adopting premium audit and subrogation analytics solutions. Premium audit solutions offer more comprehensive premium audits at lower costs, driving increased revenue.
Modern premium audit solutions offer robust rules engines and workflows, collaboration tools, custom reports, and cloud deployment options. Some leverage AI, machine learning, and predictive analytics to optimize the frequency of audits, types of audits conducted, and identification of potentially mispriced policies. Next-generation features include predictive audit generation and next-best-action recommendations, leveraging third-party data for insights and fraud identification. Premium audit solutions also offer insureds better customer experiences.
An opportunity exists to leverage claim data with exposure and environmental data to cross-reference employees based on job classifications for audit purposes and type of injury. Analysis of loss runs to determine what people are doing when they get hurt, and the indemnity benefits paid help insurers to validate the accuracy of their exposure data and identify anomalies for further review
Loss and loss adjustment expenses are the largest cost component for property/casualty carriers. As such, anything carriers can do to reduce these costs significantly impacts profitability. One element of the claims settlement process is subrogation, which refers to the negotiation between carriers following a claim as to which carrier is liable for paying a claim. An aging claims workforce with ensuing loss of experience, cost pressures, and a large volume of claims data are all reasons to adopt automated solutions, leveraging AI or related technologies, blockchain, or predictive analytics.
Subrogation analytics solutions can rapidly review structured and unstructured data to identify the most promising opportunities for subrogation recovery. They leverage business rules and digital processes to speed recoveries and the overall claims settlement process. They can also predict liability risk for the third party’s insurer. Subrogation-specific solution functionality may include one or more of the following: detection, estimation, recommendation of next best action, subrogation professionals’ workflows, recovery workflows, and total loss/salvage workflows.
Both solution categories offer insurers the opportunity for increased revenue, reduced costs, enhanced customer experience, and improved efficiency.
For further discussion of premium audit solutions, contact me at [email protected] or Carey Geaglone at [email protected], or read our report Premium Audit Solutions: Overview and Prominent Providers.
For further discussion of subrogation analytics solutions, contact me at [email protected] or Deb Zawisza at [email protected], or read our report Property/Casualty Subrogation Analytics: Overview and Prominent Providers.
