Posts

DATA DRIVES INNOVATION, BUT HOW?

Data flow is a core consideration for any organization, but insurance providers are discovering more and more that their data usage is affecting every aspect of operations. From underwriting to claims assessment, firms have to be able to optimize data analytics and gain actionable insights faster and more efficiently than ever before in order to remain one step ahead of the competition and provide the best service to clients. This is especially true in the medical professional liability field.

Optimizing data usage requires many considerations. According to ComputerWeekly, it is predictive analytics that is delivering the value that firms need, and as such, insurance providers have to invest in a core solution that provides swift, reliable and customizable reports on their data. The main goal here is to drive innovation toward identifying risks sooner and increasing the overall quality of service to customers by weeding out fraud and loss.

With a predictive analytics solution in place, more insurance providers will be able to adapt to the big data trend as well, in order to boost efficiency despite large volumes of information coming in at a faster pace, and the overall restructuring of how data usage has to occur in order to derive the most value.

What data should be used?

In order to optimize data usage with predictive analytics in light of the big data boom, companies have to consider the what, why and how, according to ITPRoPortal. When it comes to business analytics solutions, the first question that needs to be asked is, “What data should be used?” The short answer is “all of it,” but that doesn’t really provide any insights.

For most firms, the key will be to optimize insights by providing as much information to the predictive analytics solutions as possible when generating reports. The advantage is that these tools can handle larger amounts of this resource, as they organize, assess and utilize it faster and more efficiently.

Why go predictive?

With several advanced analytics solutions on the market, some firms may question why predictive is the best way to go. In the professional liability insurance market, being able to predict and avoid loss is far more useful than any other form of analytics, ensuring that firms are eliminating risk and fraud before it happens, rather than reacting to it after the fact. This optimizes the overall returns and helps boost the total quality of service over time, to increase the provider’s reputation and help bring in more clients as well.

With an optimized business intelligence platform, insurers won’t even have to worry about the data being used- simply define the parameters and develop complex, yet easy-to-follow reports every day.

How is the data and analytics trend changing?

This is almost a two-part question, because understanding analytics and big data trends requires knowing how they are evolving and how to optimize the tools used to adapt when necessary. With the right business intelligence solution in place, firms will be able to gain a level of sustainable action that will ensure smooth data usage over time and optimize the insights achieved faster. This leaves more time for assessment and tweaking of the processes as time goes on to ensure that a high standard of quality is maintained.

Modern analytics expectations are plentiful, requiring a strong approach to ensure optimized workflow at all times. Predictive analytics solutions provide that quality and promote growth and profit for long-term goals, not just the short-term demands of the market. By investing now, more insurance providers will have the tools in place and be ready to go when predictive analytics become a necessity rather than an advantage.

 

REVIEW: LIABILITY RATES SEE SOFT DECLINE IN FIRST QUARTER (2014)

Professional liability rates saw a soft decline- about 24 percent, during the first quarter of 2014, driven primarily by rising competition in the insurance industry.

Marsh L.L.C.’s report, “Benchmarking Trends: U.S. Umbrella and Excess Liability Rates Soften,” notes that about half of the firm’s insurer clients reported rate increases- an insubstantial change from the previous year. However, 24 percent of firms reported a rate decrease, compared to a mere 16 percent in the third quarter of 2012.

“Underwriters have been concerned about costly losses for companies in these sectors as result of explosions, pollution, and class action product litigation,” noted the report, a trend that has been having a major impact on liability rates in affected industries.

The primary driver of this soft decline has been increased competition within the professional liability market. According to Business Insurance, a large number of new insurers have entered the market in the last three years, presenting new competition and changing the major focus across the industry from rate increases to client retention.

“Insureds that can present more information to underwriters to demonstrate and explain real reductions in exposures typically will be better positioned to secure rate decreases at renewal,” the report recommended to policyholders.

As trends like these spread across insurance sectors, providers have to optimize their data management and business analytics solutions to adapt quickly. Increases in competition require firms to gain an edge and focus on high-quality data insights, delivered by predictive analytics and the latest business intelligence solution trends. Taking such an approach will enable considerable growth and flexibility to adapt to future market demands as well.

As insurers invest in high-quality predictive analytics software, however, they should expect the competition to also do the same, continuing the growth trend. This means focusing on the areas of operation that will drive the greatest growth and improve customer service the quickest. Underwriting and claims management improvements will minimize risk of fraud and other losses in particular, which can drive the best changes across the board.

Focus on efficiency, not growth

It may seem counter-intuitive, but for insurers to optimize their growth, they need to not focus on it. Too much focus on growth will limit other areas of operations that can help support those efforts. Instead, providers should center their efforts on being more efficient. Predictive modeling can optimize underwriting and claims management software to assess data faster and provide fraud detection earlier, helping these professionals work more efficiently and deliver results. This will, in turn, drive growth on its own, helping insurers leverage the new technology and big data trends to optimize workflow and deliver higher-quality service to their clients.

Ultimately, insurance providers will need to round out their investments and focus, but in order to gain an initial edge and maintain profits as the industry changes and rates decline, optimizing their business intelligence platform can provide key support for immediate and future changes.

FLAWS IN MEDICAL EXAMINER PROCESSES AFFECT INSURANCE CLAIMS

Insurance claims, from workers’ compensation to life insurance, are heavily impacted by the processes and integrity of medical examiners, physicians, nurses and other healthcare professionals. However, certain failings, or un-followed guidelines, are affecting the quality of work being performed, presenting issues in the accuracy of claims filed and increasing risk for the providers. Furthermore, according to Claims Journal, in the case of life insurance, it can leave the cause of death unanswered or even allow killers to walk free.

Claims Journal reported on a finding in North Carolina that cut corners, and other shortcomings in death investigations, are increasing legal and insurance claims risks. In one instance, a widow almost got away with murdering her husband after his death was initially ruled a car accident.

“People can get away with murder if the medical examiners don’t do their job,” Ella Grant, the victim’s mother, told The Charlotte Observer. “Their job is to check bodies from top to bottom. That did not happen.”

The Charlotte Observer recently launched an investigation into medical examiner practices and medical professional liability in these instances. The news source found that:

•Medical examiners fail to examine bodies in one of every nine cases, despite state rules that      require them to view every corpse.
•Nine times out of ten, medical examiners don’t visit death scenes, a step that national experts say is key to investigations.
•Elderly deaths get little scrutiny. Some North Carolina counties go years without performing autopsies on older victims.
•Families often wait months for rulings, which delays insurance payments and increases emotional stress.

In order to change these odds, insurers may need to increase their own scrutiny into claims fraud in order to increase the pressure on examiners and the medical community at large.

The key to optimizing underwriting and claims fraud detection is better utilizing data in these operations. Predictive analytics can play a critical role in this change, enhancing the speed and accuracy of analytics modeling and providing answers sooner, that can help assessors identify risk factors and avoid approving a potentially fraudulent claim.

Of course, some of the issues lie within the medical examiner operation structure as well, but insurance providers can reduce the risk to themselves and help the situation by optimizing their side of the equation. Advanced business analytics solutions can play a key role in these changes.

 

FALSE CLAIMS SETTLEMENT SHOWS POWER OF PREDICTIVE ANALYTICS

The power of predictive analytics lies not solely in the power to identify fraud risk, but rather in the ability to act on that information faster. Capturing real time data, and utilizing it to enhance underwriting processes, to assess and target claims fraud is a powerful tool for insurance providers, but the real value comes from being able to act on that insight faster, cutting off fraud before it causes true financial damage.

For some insurers, this can prevent millions in losses.

The Baptist Health System settlement in Florida highlights this risk and potential reward. The Department of Justice revealed that the network of hospital and medical providers agreed to pay a $2.5 million settlement on allegations of violations of the False Claims Act. These allegations include fraudulent filings by two neurologists within the system for unnecessary services and drugs against Medicare, Medicaid, TRICARE and the Federal Employees Health Benefits Program between September 2009 and October 2011. The claims stemmed from misdiagnoses of numerous patients.

“These health care providers did not only violate the laws of the United States – they violated the trust placed in them by their patients,” said Inspector General of the U.S. Office of Personnel Management Patrick McFarland.  “Federal employees deserve healthcare providers, including hospitals, that meet the highest standards of ethical and professional behavior. Today’s settlement reminds all providers that they must observe those standards, and reflects the commitment of federal law enforcement organizations to pursue improper and illegal conduct that may put the health and well-being of their patients at risk.”

The DoJ noted that this settlement marks a success for the Health Care Fraud Prevention and Enforcement Action Team initiative, a multi-departmental effort to reduce fraud in the Medicare and Medicaid systems. Since its enactment in January 2009, the initiative has been able to recover $19.1 billion through False Claims Act cases, with around $13.6 billion of that amount from cases involving fraud against federal healthcare programs.

For insurance providers, this case is an important milestone in the recovery of lost funds through claims fraud, but the best way to fight these illegal activities is to address them before they even happen in the first place. Investing in a high-quality business intelligence platform, integrating predictive analytics with underwriting and claims management processes, can provide a strong foundation for claims assessment and loss prevention. The ability to detect fraud before it causes a loss, rather than fight to recover funds after the fact, places a powerful tool in a firm’s arsenal, optimizing workflow around active retention, rather than reactive recovery

Ultimately, there is more to medical professional liability insurance optimization than predictive analytics software, but adding such a useful tool can help drive the progress providers need to kick start their other initiatives and start cutting their lossesturning up the value of underwriting, a serious area in need of improvement for many insurers.

EXPECTED CHALLENGES IN THE WORKERS’ COMPENSATION INDUSTRY

Workers’ compensation insurance is evolving currently, with changes at the state and federal level in the form of new legislation, regulations and the healthcare bills, affecting insurers’ workflow. As these challenges hit home, providers will need to adapt and overcome them by changing the way they approach claims management, underwriting and other key processes. One way to accomplish such effective adjustments is to invest in high-quality predictive analytics solutions to drive innovation and efficiency in data management and insights. However, insurers will need to keep their eyes on several other trials on the horizon which will affect workers’ compensation in general, as well as their operations to effectively provide coverage.

According to Insurance Journal, there are 10 challenges on the horizon for workers’ compensation, and better understanding them will give insurance providers stronger ground to approach the future of their industry from- potentially turning these challenges into opportunities. Below are a few of these trends.

Wages

With the average U.S. worker’s salary remaining stagnant over the last year, the low wages that professionals are seeing are affecting workers’ compensation rates.

“Salary stagnation or low growth of wages will have a telling impact on the workers’ comp industry in the future, for the simple reason that payroll growth is necessary in order to have premium growth,” John Leonard, President and CEO of MEMIC, told the news source. “If you consider that payroll is one of the basic components of developing a premium for a risk, once you have no growth or low growth, that has a capping effect, so to speak, in terms of premium growth.”

Leonard further noted that the split in medical and indemnity costs has been affected by this change. Prior to the recession of wage growth, 60 percent of the average workers’ compensation claim was attributed to indemnity payments. However, today the ratio has reversed, with only 40 percent going toward indemnity and 60 percent of claims dollars to medical costs.

“So if, in fact, there is slow or no wage growth, we’re going to see a continuing imbalance in terms of the growth of the medical component with no growth on the indemnity side,” Leonard concluded.

Affordable health care

The Affordable Care Act could be a considered a success or a failure, depending on which side of the fence you sit, but in terms of workers’ compensation, it could present a new risk in the form of non-work related injury claims.

John Leonard noted to the news source that due to the change in healthcare insurance, professionals who are injured in their time off may wait until they are back at work to report the incident- in such a way that would qualify it as a workers’ compensation case. This type of fraud will present a unique risk to insurers, as it is increasingly difficult to identify. Furthermore, physicians will need to be wary of a reduction of reimbursement rates from Medicare- which will have a compounded effect on medical professional liability insurance risks.

“Combined with the growth in Medicaid– where reimbursement rates are quite low– there is some concern that providers might start to find ways to get their patients’ injuries covered by workers’ comp, a concept called cost shifting,” said Leonard, according to the report. “That is potentially a bigger concern, but right now the whole thing is uncertain.”

Worker age and health

General concern over younger professionals entering the workforce is also expected to have an effect on insurers. Harry Shuford, Chief Economist for NCCI, noted that younger employees, rather than older ones, should be a bigger worry regarding health risks, due in part to the skills gap, and a general lackadaisical approach to employment in younger generations. In fact, Shuford noted, that even middle-aged workers seem to be more of a risk than older ones.

Ultimately, these changes will affect the way insurers need to approach risk assessment and claims fraud, and investing in the right business analytics solution will help to support this movement.

LIABILITY FOR CYBER THREATS RISING

With considerable changes coming in technology, especially data and cloud-related solutions for businesses, cyber professional liability insurance is a must for enterprises. However, few understand the need or value of these solutions, with a mere 5 percent of companies reporting they have coverage, according to Insurance Business America.

In fact, 39 percent of businesses believe cyber threats are covered under their commercial general liability policies, but this is a misconception caused by some specific overlaps between the two types of coverage. Too many firms think that their CGL coverage will protect them from liability from cyber attacks.

“This is certainly not the case, as a CGL policy has many gaps as it relates to cyber risk and was not written to cover cyber events,” Christine Marciano, president of Cyber Data-Risk Managers in New York, told the news source. “Several breaches within recent years have been battled out in court with insurers versus CGL policyholders.”

As many industries continue to be heavily affected by evolving technologies, particularly the cloud, the need to optimize their liability coverage increases. As such, insurers should consider improving their own strategies to increase awareness of the need for high-end coverage.

Beyond cyber liability coverage, general professional liability insurance will become critical moving forward, especially in healthcare-related fields. Medical centers will be utilizing data and expanding technology just as much as the next firm, and proper protection from cyber risks will be crucial for care providers.

The evolution of data storage and use will impact insurers just as much as it does the businesses they offer service to. By investing a high-quality business intelligence platform, firms will be able to leverage new solutions and increasing volumes of data more effectively for whatever purpose they need, whether it’s to increase claims management efficiency or broadening their client base through improved service awareness. The end result is the same in either instance- stronger data use through predictive analytics and other advanced tools.

Furthermore, the threats to operational integrity, for firms increasing their reliance on data and related technologies, are only going to continue. Nicolas Christin, a researcher with Carnegie Mellon, told the news source that, following the breach of security at Target, two dozen other attacks have been reported, but on a smaller scale.

“You’re going to see more and more people trying this,” Christin told The Washington Post “If you just saw your neighbor win the lottery, even if you weren’t interested in the lottery before, you may go out and buy a ticket.”

Ultimately, the deployment of higher-quality business analytics solutions will help insurers anticipate the types of risks presented by these scenarios, and optimize their coverage around them, while better protecting themselves from the inherent challenges of professional liability coverage. To this end, their clients will benefit from the improved service and the cost of coverage will even out, even as the threats remain at large.

MAJOR CHANGES COMING FOR RISK MANAGEMENT IN LIABILITY, WORKERS’ COMPENSATION INSURANCE

With the industry continuing to evolve, risk management in several areas of insurance is changing rapidly. Understanding the trends, where they are headed and what to expect will allow insurers to optimize their operations around the impact this evolution is having, while focusing on the specific areas of workflow that will see the largest changes. According to PropertyCasualty360, the most unusual alterations that firms should expect to see change their risk management and overall operations are pricing cycles and rates as they enter “unfamiliar territory.”

The ALIRT Insurance Research firm addressed this topic in its year-end report in 2013, specifically the lack of a soft-market cycle, despite surplus being at an all-time high, supported by solid underwriting, operating profitability and low catastrophe loss.

“Higher capital positions make achieving target ROIs more difficult. With the denominator going up, so must the numerator – and thus the plea for higher pricing,” the firm said, according to the news source.

“(There has been an) evolution of where the rate trends have been going (over the past few years),” explained Pamela Ferrandino, national casualty practice leader for Willis North America. “So probably three years ago we started to see some rate increases coming through, and then toward the end of (last) year, we started seeing the rate increases back off a little bit.”

Overall, these changes are affecting the numbers that firms use to determine rates, making them “deceiving,” with two different sets of information coming from groups of clients.

Liability trends split

Professional liability coverage demonstrates this two-group split very clearly, the news source reported. In 2013, median and average rate increases were around 5 percent, 2014’s numbers have fallen to barely 1.5 percent. However, the split occurs where 35 percent of the market is still reporting 3.5 percent rate increases, while another 35 to 40 percent isn’t reporting any rise in premiums.

“So the two distributions, which are completely separate, are creating an average rate increase of 1.5 percent,” Ferrandino told the source. “We’re literally seeing two separate curves.”

Workers’ compensation stabilizing

The split occurring in the workers’ compensation field is more geographically separated. While premiums are up nationally, some states are reporting a decline while many see a stabilizing effect in their rates.

“In June 2011 … I saw on average rate increases of about 2.5 percent for large national accounts,” Ferrandino reported. “When we look at what the trends were for June 2012, we saw average rate increases probably closer to 5.5 to 6 percent – close to 50 percent of clients were getting rate increases in that range. When we move to June 2013, we started seeing a little bit of a softening or shifting back. So some- about 30 percent of clients – were getting about a 2.5 percent rate increase and some clients- maybe about 35-40 percent – were getting a rate increase in that 5.5 to 6 percent range.”

This trend is further compounded in 2014, as early reports indicate that more than half of firms are getting the 2.5 percent rate again- indicating that the rate of increase is slowing again.

As rates fluctuate, providers have to be ready to adapt and overcome the demand this will put on their internal operations. Underwriting and policy management efforts will be heavily affected, requiring firms to boost the efficiency of these efforts, by investing in predictive analytics to enhance business intelligence operations for example. The right support will lend itself to stronger productivity to anticipate business-changing trends like rapid rate increases or drops, ensuring that insurers will be able to continue offering clients high-quality service regardless of where premiums go.

NEW TYPES OF PRACTICES SHAKING THINGS UP IN THE MEDICAL PROFESSIONAL LIABILITY WORLD

For professional liability insurers, the medical industry may not seem to change much, but on the other end, a storm is brewing that could shake the foundations of innovation. Insurance providers may need to broaden their audience pool and consider the offerings they have beyond the scope of traditional care centers in order to harness the growth that is occurring within the industry and start seeing some improvements within their own.

According to Insurance Business America, the health care industry is on an upward trend, despite the decrease in general practitioners, because of new interest among emerging businesses classes operating under the general umbrella of medicine. In fact, the U.S. Bureau of Labor Statistics has predicted growth in the industry, with nearly 2.3 million new jobs opening up between 2008 and 2018.

“A lot of agents that specialized in small practice doctors will need to find different ways of keeping their doors open,” Brad Rosgen, Healthcare Practice Leader at Brad & Wilcox, told the news source. “That means expanding to things they may not have worked on in the past, including home healthcare or outpatient services.”

Areas of the industry such as in-home care, hospice, anesthesiology and tele-medicine are expected to boom, while the traditional practices are closing their doors or shrinking in general.

“It’s not something a lot of people think to go after,” Rosgen noted, regarding hospice care. “It’s a fantastic business to write from a risk standpoint and carriers typically provide rates that are aggressive, but fair.”

In fact, many of these areas are so new for insurers that there is a lot of room for expansion. Loose underwriting guidelines increase the need for communication with clients, and require firms to provide significant “value-adding services,” according to the news source. This means focusing on the tools that will optimize service, and deliver high-quality policy options to firms. In order to accomplish this, insurers are going to have to look more closely at their own operations, and investing in a business intelligence platform that will support these changes.

“(Medical professional liability) is definitely an area of growth. Competitive as it is, it is still a high-growth industry and will continue to be, as the population grows,” Rosgen also said to the source. “If you’re not already, it’s definitely an area to get into if you want to keep pace with the general rate of the economy and have something new or fun to talk about every time you visit a client.”

Rather than running new services at high risk, insurers will need to deploy advanced business analytics solutions that will help them optimize workflow around these changes and deliver high-quality claims and policy management services at reduced risk to themselves. These improvements will provide the foundation for future growth and improve the chances of success for providers branching out into new territory, as both the professional liability insurance field, and healthcare, continue to evolve.

UNDERSTANDING INSURANCE MECHANICS FOR BETTER COVERAGE

For the insured, it isn’t just about having coverage, but ensuring that coverage meets professional liability needs. For insurers, optimizing service and offering the most effective and competitive rates is achieved by ensuring that clients understand what’s covered, what isn’t, and the general mechanics and requirements of contractual liability insurance.

PropertyCasualty360 focused on this very topic, offering a lengthy explanation of what is necessary for effective coverage in the professional liability field. The breakdown is, essentially, that recognizing the different factors that create liability, and the mechanics that alter a situation in a way that changes the effect of the coverage, is critical for proper insurance policies. For any business, there are several outcomes that can occur in a given risk situation. Understanding the full scope of the insurance policy and how it covers those situations will help clients minimize their own risk, translating to reduced losses to the provider in the end.

Ultimately, professional liability insurance is a critical area for growth and insurers will need to optimize their offerings with the proper use of data to ensure clear and concise communication with clients. Predictive analytics solutions can help optimize this area of operations and enhance the service being offered for further improvement.

HEALTHCARE, MEDICAL PROFESSIONAL LIABILITY ANALYTICS STILL MATURING

Business analytics solutions are still evolving at a rapid pace and many industries are fighting to stay ahead of the curve. For healthcare, hospitals and specific fields like medical professional liability, analytics is still in an immature place, and the optimization of data utilization and warehousing can be a struggle. For many hospitals and firms involved in liability insurance and the like, investing in a high-quality business intelligence platform and deploying tools that can adapt over time to industry demands will help set the stage for steady growth and optimization of the industry.

According to HIMSS Analytics, the first industry-wide assessment of maturity in analytics found that most facilities feel analytics has yet to reach anything above a moderate level of maturity.

“The percentage of hospitals with clinical data warehouse and data mining has grown considerably in the past year,” said James Gaston, Senior Director for clinical and business intelligence at the research firm. “Hospitals are collecting more data — what they are doing with that data is another thing.”

For healthcare professional liability insurance providers, this information is critical for the forward momentum of the industry. The maturity and validity of client data processes affects underwriting, claims management, risk assessment and other critical areas of operation for the insurer. Furthermore, it can have a significant impact on the speed and value of analytics processes, changing big data goals, leadership potential for the provider and much more.

“(Determining the value of good analytics) allows you to understand what your data is saying, what your data quality problems are- and begin to streamline and understand that model that you create around that particular decision point,” said Gaston. “It’s a struggle. You’ve got lots of data and you’re trying to enable people to make decisions. How does that actually happen? There’s no turn-key solution. There’s no pixie dust.”

Proper leveraging of data affect professional liability insurer operations in two key ways. It changes how an insurer approaches the information that is available to them and it expedites the high-risk processes that determine claims fraud and loss potential. However, this is only on the insurance provider’s side of the equation. When hospitals begin to improve their analytics and data potential, the entire game gets elevated a notch and overall value increases- but so does the risk.

As healthcare providers focus on improving their data potential, insurers must do the same in order to keep up and maintain the same level of risk, or decrease it as possible. The right approach will help level the playing field and optimize key data-related processes such as underwriting- areas of operations that providers already seek to improve in order to leverage their services for more value.

By investing in high-quality predictive analytics solutions and implementing them, insurers will be able to streamline their own data analytics efforts and focus on adapting to the future of the industry, whichever direction it takes.