COMMERCIAL LINES PROFESSIONAL LIABILITY SECTOR GROWS

The latest study of the U.S. commercial lines insurance market by Fitch Ratings indicates positive growth for insurers in terms of general profitability. Last year marked the third year of steady premium growth, and a stable rating outlook pronouncement by the firm.

Overall, the commercial lines sector showed a 3.6 percent increase in 2013 over the previous year, which, while less than 2012’s growth rate, was supported by a 6-point reduction in reported accident year loss ratio to 66.7 percent. The strongest growth was held by the property related segment, while worker’s compensation and medical professional liability were weaker due to underwriting losses. Regardless of challenges in specific sectors, commercial lines accident year loss ratios are expected continue to show steady improvement in the future as well, though with lower price increases. Currently, underwriting profits are considered the “only viable replacement for falling investment income in the current low yield environment,” the report indicated.

This report is based on Fitch’s Property/Casualty Insurers’ 2013 Financial Results report and in-house methodologies.

For insurers looking to improve their underwriting potential and start leveraging potential for growth, the key is to better harness big data by embracing stronger business analytics solutions. Through predictive analytics, providers will be able to address underwriting losses and start turning the tides with regard to slow growth.

The potential for gains is there, but firms need to have the right tools in place to leverage their data more effectively. Predictive analytics solutions help optimize workflow around data needs, supporting underwriting and claims management and establishing stronger protocols for risk and loss control. This will translate into optimized growth for firms that are struggling and drive accident year loss ratios down even further.

Continued growth and profitability is critical for the professional liability sector, and by balancing data use with predictive analytics, insurers will be able to optimize their approach to the processes that can have the biggest impact on loss and operations.

Beyond data use, investing in a stronger business intelligence platform can help insurers leverage their operations for increased productivity and stronger customer service, optimizing many areas of operation. This boost to performance will translate into sales and profits as well, helping balance out the changes needed for sustained growth that firms need and want moving forward.

PROFESSIONAL LIABILITY IN FITNESS

Professional liability coverage isn’t just just for health care professionals, there are many industries that need the right insurance to protect their interests. One field, that the need for coverage may come as a surprise to, however, is fitness. If personal trainers, nutritionists and gyms don’t invest in the appropriate liability insurance, they could be putting themselves at risk.

According to Club Industry, professional liability insurance can protect fitness professionals from a variety of incidents, and it is up to insurers to leverage their own offerings properly in order to appeal to gyms and other fitness facilities. By providing the right offerings and optimizing coverage through improved underwriting and claims management software, insurance providers will be able to educate gyms and trainers regarding the importance of liability coverage and put their offerings out ahead of the pack.

By investing in predictive analytics and the appropriate business intelligence infrastructure, insurers will be able to optimize their offerings regardless of industry, whether appealing to new clients in a never-before entered market like fitness, or traditional verticals like healthcare or finance. The ends result is stronger operations all around, and better service to appeal to customers across the board.

IMPROVED DATA USAGE KEY FOR REDUCING WORKERS’ COMPENSATION CLAIMS

The costs associated with workers’ compensation claims can add up quickly for insurers that aren’t optimizing their data use. According to Insurance Business America, lowering compensation claims and rates has traditionally been put on the shoulders of employers- taking more proactive safety measures. However, a study by Aflac notes that insurers can reduce claims rates for their clients as well, by optimizing how they use their data.

Protecting the employee

The Aflac Workers’ Compensation Report specifically notes that about 42 percent of insurers that also offered voluntary accident and disability insurance were able to reduce the number of workers’ compensation claims they received by up to 50 percent. Specifically, 17 percent of employers that offered just voluntary accident insurance and 15 percent of those offering just disability- in addition to their workers’ compensation insurance- saw claims decline between 25 and 49 percent. Larger employers saw a more significant decline, while SMBs reported about a 34 percent reduction in claims.

“For years, insurance agents and brokers have heard anecdotal rumors linking accident and disability insurance to reduced workers’ compensation claims, and we learned the anecdotes are true based on our study results,” said Tye Elliot, Vice President of Core Broker Sales for Aflac, according to the news source. “These findings confirm the correlation (and) employers can now weigh the potential positive financial effects of offering accident and disability insurance against the costs of workers’ compensation claims.”

Rebecca Shafer, an industry expert, agreed with Aflac’s findings. Including disability and voluntary accident insurance provides an easier route for employees to be reimbursed for injuries or illnesses.

“They can get involved in the conversation and steer the employee towards the most appropriate remedy,” Shafer told the news source. “It’s not always clear at the outset what the cause of the injury is, which could raise workers’ comp questions.”

Using the employee

The key to optimizing workers’ compensation claims around risk and liability is to expand the data sets that are used to identify fraud, liability and claims payouts. By integrating disability and/or voluntary accident insurance with workers’ comp offerings, insurers are able to expand their available information and put it to better use with high-quality business analytics solutions.

Predictive analytics provides powerful tools to optimize claims management and underwriting processes. Firms simply need the data to feed these solutions. By expanding the potential information available to underwriters and assessors, insurers are streamlining their operations and establishing a stronger line of defense against fraud and other risks. The end result is better offerings for clients, more protection for professionals and safer working environments overall.

Firms need to establish strong data management and analytics processes to continue moving forward in the insurance industry. Investing in a high-quality business intelligence platform, integrating predictive analytics and establishing the right strategy will help providers be successful and maintain their competitive edge as the insurance market continues to evolve.

PREDICTING THE IMPACT OF DATA

Data is changing the way insurers operate in significant ways. From how they collaborate over claims management software to the accessibility of key risk assessment capabilities, insurance providers need to focus on the potential that their data opens up.

According to Business 2 Community, predictive analytics is on the leading edge of data potential. The next generation of business analytics solutions offers innovation and the ability to overcome challenges never before seen in the insurance industry. This is why it is critical for firms to invest in the business intelligence platform capable to deploying high-quality analytics and insights and integrating these processes with underwriting and claims management.

Chance Coble, an industry expert, told the news source that these tools are only as valuable as the organization’s ability to leverage its data though them.

“Often, that means starting with basic questions about your business, it’s opportunities, efficiency and risk, and then using the evidence available to answer those questions,” Coble noted. “Predictive analysis is one of the basic tools for accomplishing this, and is essential when it comes to handling big data applications.”

These tools allow insurers to expand their approach to key processes like claims management and underwriting while improving the hierarchy of analytics and business intelligence. This makes them essential for forward movement within the insurance industry, whether a firm focuses on professional liability, workers’ compensation or another risk-filled field.

It is important for insurers to recognize the potential in big data, but it is equally critical for them to deploy predictive analytics solutions to harness that potential and leverage it for growth. Doing so not only strengthens their position within the market, but supports future improvements as well. The end result is a stronger operational integrity now- that enables future resiliency.

Insurers understand the inherent risks in claims management already. Deploying tools that help underline them, reduce them and turn them into potential value drivers is a win-win situation. By investing in predictive analytics, firms are supporting not just big data, but the future of their industry. Doing so sets a precedence for growth and proper leveraging of opportunity that firms will benefit from for years to come. The right strategy now can spell success down the road if a provider plays its cards correctly and deploys the right solutions to managing and leveraging data efficiently.

PREDICTIVE ANALYTICS USED TO ASSESS HEART FAILURE RISK

As the benefits of advanced business analytics solutions grow, insurers and medical centers alike are embracing them to assess risk. For insurers, predictive analytics help to establish stronger claims management and underwriting processes to reduce fraud and loss risks, but for hospitals they can be put to use to help save patients lives.

According to Baseline Magazine, new deployments of predictive analytics solutions are allowing the Carilion Clinic healthcare network in Virginia to assess patients for heart failure risk and other medical issues, improving overall care and the ability of hospital staff to save lives. This potential was established when the clinic deployed its EHR system.

Once it had put its EHR solution in place to keep up with federal mandates, the Carilion Clinic discovered it had significantly more data on patients to use in daily operations. By deploying a stronger business intelligence platform, it was able to but that information to good use and begin assessing patients for risks that it couldn’t previously. Nearly 3,500 out of the 8,500 patients the hospitals, within the network, saw during that time- were identified as at-risk. They would not have been without predictive analytics – potentially saving thousands of lives.

While these benefits outline the potential of predictive analytics, the advantage offered for healthcare professional liability insurance providers continues to grow as well.

CHANGING WORKFLOW WITH ANALYTICS

A business intelligence solution can provide a strong foundation that enables growth and influences the way an insurer works. However, the changes to workflow that occur from the deployment of predictive analytics can be a lot for the individual underwriter or claims assessor to take in. Having a firmer understanding of exactly how operations will be affected by the deployment of these tools can help optimize the migration to stronger processes and the proper leveraging of these tools for performance.

The evolution of business analytics solutions promises increased potential of data and improved risk detection, among other benefits to insurance providers. However, these changes only come once employees have embraced the changes to workflow and properly adapted to the new demands and stresses put on them. Increased insights and quality of reports are advantageous, but they create new demands for underwriting and claims management that these professions will have to take into consideration, such as performing analytics themselves or using reports in new ways to properly capitalize on their value.

Faster results

One thing that may cause a little bit of chaos in employees’ routines is the fact that they will be able to gain insights into client data much faster with advanced predictive analytics solutions. This increased speed will have an impact on the way they work, as well as potentially on their working hours. Underwriters that may have previously set the business intelligence platform to work on a data set at the end of the day in order to receive their reports in the morning may suddenly have a much faster turn around, allowing staff to perform analysis and act on them in a single work day.

Smarter results

Furthermore, the process of gaining insights can be simplified through predictive analytics, allowing underwriters and assessors to establish more customized parameters and allow the technology to sort for relevant data, rather than carefully selecting the information to analyzed. This simplifies the user end of these processes while delivering smarter, more useful reports.

Expanded results

The other major changes firms should expect to see is increased use of analytics in a general sense. The increased speed and versatility of predictive analytic software allows professionals to do more with their data, improving overall insight in areas that they may not have bothered using analytics for in the past. This will mean more time spent assessing data, but stronger performance as a result, changing the way underwriters and claims assessors do their jobs in a broad sense.

5 TRENDS CHANGING HEALTHCARE PROFESSIONAL LIABILITY INSURANCE

Healthcare insurance and professional liability coverage are often influenced by the same trends and technologies. As the insurance market evolves, challenges occur that are best resolved by IT innovation. According to Insurance & Technology, IT has to take a “transformative role,” providing the guidance for firms to achieve compliance, growth, customer satisfaction and the evolution of the insurance industry as a whole.

Delving deeper into how IT influences the growth of the industry, many firms are turning their attention toward their business intelligence platform and the analytics strategies. By investing in stronger business analytics solutions and focusing on optimizing the use of data, insurers are able to leverage trends more effectively and start shifting from a reactive risk management strategy to a proactive one. However, several trends are influencing the direction that providers are able to take with predictive analytics, and understanding them all will help firms make a decision regarding IT investments and the future of their operations.

Data usage

How firms are using data is one of the biggest changes the insurance industry is seeing today, particularly with regard to claims management software. According to Insurance & Technology, insurers want to see improved management of big data, but are also focused on centralizing their data in order to streamline access and it’s use. Actionable insights are key for growth, and streamlining the organization and control of information will help firms provide a stronger foundation for underwriting and other claims-related processes.

As reliance on data increases, and insurers focus on leveraging it more effectively, they also need to optimize the secondary issues regarding data- such as storage.

The cloud

As firms focus on overall data management to boost their operations, investing in expansive solutions, not only for the analytics side, but storage and other aspects of proper data house keeping, the cloud becomes a more enticing solution. Many insurers are turning away from legacy systems and embracing cloud computing for increased flexibility and scalability in their data management processes. These efforts don’t just improve storage capabilities, however. The cloud offers improved access to data for predictive analytics solutions, expediting workflow and helping firms build their computing potential for underwriting and claims management needs.

Changing mindsets

According to the news source, one major trend that insurers are seeing lately is a shift from a B2B mindset to one focused on B2C. With insured parties viewed more like an individual rather than a business, firms are able to focus their data gathering and usage, focusing on individual risks and loss potential. This also allows insurance providers to optimize customer service, offering a stronger experience to individual clients. The spike in available information has changed not only the potential for insurance service quality, but the expectations of the customer, and it is important for firms to meet those expectations.

Emphasis on quality

The quality of operations is the biggest focal point for insurers. Firms want to minimize risk and the potential for loss, improve customer service and drive the value of data by enhancing their capability for insight. Predictive analytics offers gains in all of these areas by increasing the potential of data, not just the amount or quality of insights. By expediting data analytics processes, and gaining the ability to derive more from these areas of operation, insurance providers are able to then directly impact the quality of service they are providing customers, and the quality of their own actions to increase profits.

Compliance

Compliance regulations are also evolving at the same time, however, and providers that don’t keep them in mind may face a struggle later on. Luckily, high-quality analytics solutions help achieve full compliance regarding data privacy and help firms leverage their information to the fullest extent without worrying about keeping up with the relevant laws.

TARGETED ANALYTICS PROVIDES VALUE FOR INSURERS

The big data trend offers significantly more information for insurance providers to base their business analytics solutions and related operations around. However, as the volume of data increases, firms need to be more aware of how they are leveraging it, ensuring that they aren’t over simplifying analytics and insights in order to use more information, and therefore removing the client from the equation.

By broadening data use, insurers risk alienating clients. Because of the wealth of information at their disposal, firms can see the customer as a statistic, which will reduce the quality of service and overall client experience. This is why it is critical to personalize processes with targeted insights. Underwriting and claims management software will benefit greatly from the personalized touch, allowing providers to assess client needs on a personal level and offer them the best service for their unique needs.

The trick to targeting information and analytics is to invest in predictive analytics. Advanced solutions for business intelligence will allow insurers to harness client-specific information more easily and leverage it to assess risk factors like fraud and ensure the highest level of service is being offered to customers.

According to Insurance & Technology, this is a better approach for firms because it allows them to ensure that policies are more relevant to the client’s needs, boosting the customer experience and improving service satisfaction.

As the insurance industry evolves, offering the best service possible is the responsibility of every provider. Harnessing predictive analytics solutions allows an insurer to harness customer data more effectively and use it to drive service, underwriting and claims management across a number of variables. From blanket risk to individual claims assessment, firms will be able to optimize these processes around the customer, rather than their own value drivers, and maximize the efficiency of operations at the same time.

By improving how an insurance provider uses the data available to it, a firm will be able to optimize its business intelligence solution around larger volumes of information and leverage them accordingly. The optimal strategy for these efforts is to do so in a way that improves client relationships- hence the personalization of analytics.

Beyond the operations of the insurance provider such efforts will help improve the verticals affected, be they workers’ compensation or medical professional liability. These insurance areas are heavily affected by a number of changing trends currently, including the Affordable Care Act and changing regulations regarding compensation coverage. Insurers have to consistently evolve their operations to incorporate these changes and maintain a minimum standard of quality. By investing in predictive analytics and streamlining workflow around optimized use of data, firms will be able to focus on meeting compliance needs and other changes occurring within their industry.

Predictive analytics can provide a stronger foundation for insurance providers to work from, making any change easier to cope with and more manageable- including higher demand for personalized coverage and service.

FOCUSING ON THE CUSTOMER

In the insurance industry, the customer experience is becoming a much more important factor in operations, and insurers are developing strategies that help boost the quality of customer service alongside data analytics and internal processes. Ultimately, this change in focus may be a breath of fresh air for the industry, helping providers turn a profit in tumultuous times.

According to Insurance & Technology, the drive for a better customer experience isn’t only led by changes to operations, but new regulations as well, making it not just a necessity for competitive success, but maintained compliance. Luckily for businesses, new regulations came at the same time as new tools for leveraging customer data for service needs.

Predictive analytics solutions can help firms access new stores of data coming from social media and the Internet, improving the speed of claims management and the ability to detect and eliminate fraud and other loss risks. In return, providers are able to direct the improved speed and quality of operations into a boost of service to clients. This growth is driven by changes to the technology firms have available and the evolution of traditional channels for service.

Customer service beyond the contact center

One of the biggest changes that insurers are seeing is the evolution of service away from the contact center. Because of improved communications tools, and a need for direct interaction with clients, firms are delivering service at multiple levels of operations, and their ability to provide a consistent experience across the board needs to grow as well. An improved business intelligence solution will help support these changes, allowing access to key reports and insights at every level.

Service never ends

Unless a client terminates his or her contract, the customer service experience never ends today. Firms have to consider the fact that their operations are constantly being evaluated by customers, from the speed of claims assessment to the quality of risk detection. Increased availability of data works both ways, and firms that are optimizing their approach with predictive analytics will demonstrate their dedication to excellence to clients. This will help drive the quality of service in itself, while helping make actionable insights a core component of operations, which customers can rely on as a demonstration of that quality.

For most firms, deploying a high-quality analytics strategy will be the first step in leveraging data for a stronger client relationship overall.

ANALYTICS HELPS WITH REALISTIC POLICY PRICING

Insurance providers are finding new ways to leverage predictive analytics and high-quality business intelligence solutions on a regular basis, but one of the biggest advantages that many firms are finding for advanced business analytics solutions is optimizing their policy pricing.

According to Insurance & Technology, big data and analytics is helping insurers improve their pricing, utilizing data to make rates more realistic to the risk that a client presents. This move has been labeled by some as price gouging, but these solutions are expected to help save consumers money over time. For insurers, they can help improve service- not just leverage more money out of clients.

“Insurers have always modeled what rate increases will do to their expected market, both from their ability to attract new clients and retain existing ones,” the news source noted. “It’s a part of every pricing actuary’s job. The fact that insurers are leveraging big data as part of this long-standing practice is not news. Nor should it be perceived as harming customers. Really, it’s just another tool in trying to gain a competitive advantage and underwrite business profitably.”

The opposition, led by the Consumer Federation of America and the Center for Economic Justice, have called pricing optimization “a euphemism for price gouging,” assuming that insurers will leverage big data to create “unfair and discriminatory” pricing.

The key to avoiding these accusations and optimizing pricing lies in proper leveraging of predictive analytics solutions. Insurers can use these tools for a number of improvements, not just pricing, and by promoting these uses as well, consumers will recognize the value they are receiving.

According to the report, optimization through big data and a business intelligence platform isn’t expected to stop at pricing either, but extend through product creation, sales and marketing, client retention, and service customization.

“This includes everything from objection handling to right-sizing the recommendations and quotes that are being put in front of the client,” The report read. “Keep in mind that ‘optimizing’ the sales process is not the same as ‘maximizing’ premium. Insurers know that the needs of each client are different and that if they oversell (limits too high, premium too high, too much coverage) the chances of the client cancelling or non-renewing are extremely high. If they undersell the client, especially if there is a loss, and coverage isn’t adequate, the insured will be equally unhappy and even may be likely to sue. Needs analysis, a staple in the life space for some time, is one form of optimization but this concept is spreading and becoming institutionalized across the sales process for all lines of business, and the service process for that matter.”

In fact, the 2013 Insurance Predictive Modeling Survey by ISO found that about 75 percent of insurers were already using predictive analytics in their pricing processes to enhance the realistic pricing options they offer clients.

“The survey confirms that the industry has recognized the value of predictive analytics but still faces challenges in this area,” noted Phil Hatfield, vice president of operations at ISO Innovative Analytics. “Data inefficiencies, scarcity of analytic talent, and the cost of that talent can hold companies back from completing as many initiatives as they would like.”

By investing in higher-quality analytics solutions and leveraging big data in more versatile ways, insurance providers can make many improvements to their operations. Pricing and service quality are just the beginning, and firms can start reducing their operating costs, enhancing productivity and focus on reducing fraud risks by making smart investments into analytics now.