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AI Ends Guesswork in Uncertain World

It’s been a tumultuous year. In just the span of a few weeks, COVID-19 emerged unexpectedly and abruptly altered almost every corner of the commercial insurance space. Stock market and GDP forecasts have whipsawed as economists and investors have tried to make sense of frequently shifting news. Now we’re in a contentious and unpredictable election cycle.

Divining the future is always a challenge, but lately it’s become especially difficult. During periods of intense change, traditional patterns and precedents lose their predictive power. Regression-style tools that provide data extrapolations become a useless blur. The average workers’ comp claim duration of 2019, for example, will look very different than it will in 2020. Litigation and fraud may emerge in new forms, with most new types passing undetected by screens developed from prior data.

One approach that can help companies navigate the uncertainty is artificial intelligence (AI), which is highly sensitive to new data and tends to react immediately, creating a dynamically updated vision of the future. While much of the world has been focused on COVID-19 and the related economic challenges, the underlying technologies behind AI have continued to accelerate in speed, efficiency and predictive accuracy. For organizations looking to become more resilient, it’s an ideal time to consider integrating machine learning, natural language processing and other AI techniques into their operations.

While the promise of AI is great, so, too, is the hype. As a result, many people have a misconception of what AI actually is — and what it is not. Let’s take a look at how it really functions, what it can and cannot do and how it can help future-proof commercial insurance.

Two Types

AI is typically viewed in two fundamentally different ways. There is the futuristic “AI-is-taking-over” version (think Skynet or similar concepts brought to life by Hollywood). This form understandably makes people a little nervous that machines will grow to dominate society (or at least replace jobs at a time when we’re already seeing unemployment lines expand).

Then there is a more prosaic version in which AI complements what humans do. Think of how Google automatically surfaces structured answers to questions you type in or how Amazon knows which product you might want to buy next. In these cases, AI extends your capabilities while leaving you in the driver’s seat. It is this more practical version that will get organizations and teams excited about modern AI-based applications and is the game-changing application in the commercial insurance space.

AI that augments human capability is especially valuable in businesses like insurance, where there is simply too much data coming in quickly for people to keep up. Image and language processing can be applied to the dozens of structured documents typically associated with a claim but can also be used to interpret unstructured information, such as handwritten doctors’ notes. Often, this approach finds important information — diagnostic codes that were considered, for example, but not officially associated with the case. Subtle cues can be detected across a wide range of files to create insights that would otherwise go unnoticed. Alerts bring those insights to adjusters’ attention, helping them take prompt action that can make all the difference in a claim.

In this way, AI becomes a kind of superpower for the adjuster. It helps adjusters see through the clutter and make decisions with speed, precision and scale. This helps adjusters become more productive and better able to focus on the claims that matter most. It also frees them up to handle the types of challenges that humans are uniquely suited for, such as detecting the hidden concern in a claimant’s words or enabling them to feel listened to during a challenging period.

See also: 3 Practical Uses for AI in Risk Management

Innovate Now to Secure the Future

AI can end up reshaping not just a single claim but how a business is managed. Claims leaders can now use it to optimize organizational practices, team performance and even partner networks. AI can score healthcare providers, for example, so carriers can direct claimants to highly rated doctors and even identify new ones to bring into the network. Carriers can also use AI to evaluate the effectiveness of their attorney panels based on specific outcomes. These are just a few examples of substantial business decisions that can now be driven by data and intelligence.

Despite the complexities and considerable challenges brought about by COVID-19 and other events this year, the insurance industry sits at a breakthrough moment. New uses for AI such as those highlighted above will continue to be identified and implemented, resulting not only in more efficient operations and empowered employees but also in better, faster, more valuable service to claimants.

As first published in Datanami.

Six Things Newsletter | July 28, 2020

Growing Risks of Social Inflation

Paul Carroll, Editor-in-Chief of ITL

“Social inflation,” an on-again, off-again issue for the insurance industry for more than four decades, is on again as a major factor in insurance claims and, thus, rates. The issue, related to beliefs and trends that lead people to expect ever-higher compensation and for juries to grant it, has been growing for several years and seems to have accelerated since last summer.

The pandemic and the economic crisis that resulted may exacerbate the problem for insurers — or may mute it. There are arguments on both sides. Some see social inflation being dampened as financially strapped people and businesses become more willing to settle a claim and as the logistical complications that come with less face-to-face interaction drag out negotiations and judicial proceedings. Some see social inflation increasing as people feel wronged and try to take out their anger on those that they distrust and that have enough assets to make them tempting targets — read, insurers (among others).

Me? I see the pandemic boosting social inflation… continue reading >

Optimizing Care with AI in Workers Comp Claims


In workers’ compensation, we’ve all seen seemingly basic claims morph into catastrophic claims.This free on-demand webinar, sponsored by CLARA analytics, lays out a tangible solution that realizes the promise of AI.

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Optimizing Care with AI in Workers Comp Claims

The expert panel explains how AI can:

  • let you identify the right provider for a case and steer the injured worker to that provider
  • help busy adjusters easily spot potentially troublesome cases and manage them better, from start to finish
  • continuously optimize your network of providers, so you can be sure to have the right provider working with the right worker at the right time.

This panel consists of: Gary Hagmueller, CEO of CLARA analytics; veteran adjuster Nicole Corey; and CLARA analytics Chief Medical Officer Paul Kim. The panel is moderated by Paul Carroll, Editor-in-Chief of Insurance Thought Leadership.

Don’t miss this free on demand panel discussion. Space is limited, so register today!


Presenters:

Gary Hagmueller

CEO, CLARA analytics

Dr. Paul Kim

Chief Medical Officer, CLARA analytics

Nicole Corey

Owner, California Work Comp Advocacy

Paul Carroll

Editor-in-Chief, Insurance Thought Leadership

COVID-19’s Impact on Delivery of Care

Two forces have emerged that will reshape the workers’ comp system for years to come. The first is the COVID-19 pandemic, which has created sudden and deep shifts to personal health practices and healthcare delivery. To reduce COVID-19’s impact, much of the U.S. population is avoiding public spaces and travel, causing enormous disruption across a range of industries, from airlines to hospitality. This change has ignited a global recession.

Together, COVID-19 and the accompanying recession are driving changes across property and casualty insurance lines, including workers’ compensation, causing carriers, reinsurers and third-party administrators to rethink long-held assumptions. Companies hoping to navigate all of this need to anticipate and prepare.

To help, we held a Q&A session with some of the smartest people in the business who sit on our advisory panel. Special thanks go to Dan Rufenacht, QBE North America; Will LaChapelle, QBE North America; David Bacon, QBE Insurance; Kevin Bingham, Chesapeake Employers’ Insurance; and Jim Kinzie, QBE Insurance. Below is a summary of responses outlining the most fundamental changes to plan for. Let us know what you think — and what your team and company are doing to adjust to this new and dynamic environment.

What are the major changes we should anticipate in workers’ compensation claims due to COVID-19?

The experts on our panel highlighted several ways that workers’ comp claims will change, many of which are related to shifts in volume and type of claim. For example, the total number of claims is likely to go down as unemployment increases. There are fewer people in the workforce, which will lead to fewer claims overall, particularly as work involving manual labor slows.

Although the volume of typical workers’ comp claims will decrease, claims for different types of injuries could escalate. There will almost certainly be an increase in occupational disease claims from workers on the front line of fighting COVID-19 (e.g., police, fire, healthcare workers.). There is emerging pressure in some states and regions/provinces to extend coverage for workers being asked by employers to extend services or responsibilities for essential businesses. There is also the potential for new ergonomic claims and other types of accidents as people adjust from working in an office to working from their bed or couch and sitting for prolonged periods. Additionally, there is a risk for the select businesses hiring new workers — there could be an increase in frequency and severity of claims if workers are inexperienced or can’t be properly trained based on conditions. On top of this, there may be some spikes in preventable accidents, resulting in new claims, if safety service visits have been canceled due to COVID-19, leaving potentially dangerous areas exposed.

Organizations should also expect to see several changes in treatment patterns emerge, as care delivery will undoubtedly be affected under the strain that COVID-19 places on healthcare systems. Most non-essential surgeries, physical therapy sessions and scheduled doctor visits are tabled for the foreseeable future. This will delay the path to health for injured workers and delay the resolution of many claims. However, telemedicine and tele-rehab solutions are being implemented in an attempt to mitigate the effects of delayed treatment. The key here with telehealth options will be ensuring that access to and the effectiveness of care delivered to injured workers remains similar to, if not greater than, the same care provided in-person with the treating doctor or therapist.

See also: Business Continuity During COVID-19  

The shift to telemedicine and tele-rehab is an example of how present stresses are opening the doors for innovations. Telehealth options and digital resistance that insurers and the larger healthcare community have been fighting over for years have suddenly become possible within the course of only a week because they are necessity-driven. At least one panelist welcomed the opportunity, adding that “the old rules of ‘we can’t direct treatment’ are ripe for breaking just now.”

How are claims teams gearing up to handle these changes? Are there parallels that come to mind?

To prepare, claims teams are keeping a close eye on the new claims coming in — the type and volume — to ensure proper resourcing and reporting. New organization structures are also being considered. For example, some organizations are considering bringing some of the claims processing that previously had been outsourced to places like India and the Philippines back in-house — and possibly permanently. The benefit of this move is to open new jobs at home, which can offer good flexibility as employees work remotely.

Also, based on behavior in past crises, the panel noted that claimants are under a lot of additional stress; therefore, it is imperative that claims teams show empathy and compassion. We are all trying to navigate an unprecedented situation, and people are doing the best that they can.

Any impact on other types of claims due to the stresses on the healthcare environment?

Panelists instantly noted how much pressure first responders are under. These workers are covered in many states under presumption laws, which can include PTSD. If so, according to our experts, there will likely be an increase in claims from first responders soon.

Any advice for claims professionals?

Panelists offered several thoughts, including:

  • Remember to stick to the basics: Conduct quality and complete investigations and thoughtful compensability evaluations. Use common sense and empathy and talk to peers and managers to manage stress and determine the best ways to help claimants.
  • Look for opportunities and new or different treatments and delivery channels that can provide relief in lieu of surgery, as almost all non-emergency surgeries have been postponed or canceled.
  • Watch how other lines indirectly and directly affect workers’ comp. For example, health insurers will be inundated with all kinds of pre-hospital, hospital and post-hospital expenses. If they can get workers’ comp to pay for these costs, it may become more important to them.

See also: Chaos in a Post-Yesterday World!  

With things evolving on a daily basis, how do we keep abreast of all the changes going on? Are there any specific resources you use?

Our experts rely on several proven and reliable industry blogs, association websites, attorney newsletters, state bulletins and other alerts to stay on top of the industry — in addition to daily news broadcasts and updates. Some listen to podcasts, as well. Sources include general business and technology, in addition to verticals.

To help, we compiled a list of some of the most useful industry-specific content mentioned:

I would like to extend my great thanks to all of our advisory panel members for sharing their insights in this turbulent time.

How to Cut Litigation Costs for Claims

Attorney involvement has been steadily driving up workers’ compensation claims costs over the past decade. In 2014, the California Workers’ Compensation Institute (CWCI) published results of a five-year study that showed that when a single injured party brought in a lawyer the associated costs per claim went up by an average of $40,000 for permanent disability payments and $25,000 for temporary total disability benefits — even if the case never went to court. In Florida from 2016 to 2017, legal fees related to workers’ comp claims totaled nearly $440 million — approximately $254 million of that came from employers defending claims while injured workers themselves were responsible for $186 million (an increase of 36% in just one year).

These cases do not bode well for anyone except law firms. Given this present reality, what can companies do to eliminate or at least minimize the effect of lawyers on the claims process? How can they protect themselves and keep costs from ballooning out of control while helping workers get back to their jobs faster? Here are three keys to consider:

1. Stop Litigation Before It Starts

This is the No. 1 component in keeping costs down and workers happy. Contrary to popular belief, workers don’t want to sue their companies. They need their jobs and want to return to them quickly. But they also want to get results. Most attorneys are engaged only when injured workers don’t feel like their claims are being properly addressed. For example, they might not know how to get what they need, or they haven’t heard back about who they should see or what the next steps should be.

To reduce the potential for attorney involvement, companies should leverage new technologies that apply artificial intelligence (AI) to search claims and assess the risk of litigation. These solutions can quickly flag claims that need intervention so that the right member of a claims team can step in and provide a bit more hand-holding, from making appointments on the worker’s behalf with doctors who have the best outcomes scores to conducting a basic check-in to see how the worker is feeling or how the recovery process is going.

See also: Breaking the Cycle of Litigation in WC  

Early intervention that cuts off litigation before it starts is the ideal scenario. Claims that steer away from an engaged attorney can save roughly $42,617 from direct claims costs. That’s not spare change, particularly when a company needs to address multiple claims. In one example from a recent CLARA study, a small regional carrier ran a six-month pilot using AI-based software to identify claims that were referred to a high-touch team. At the end of the pilot, the carrier reported that its “litigation rate went from 14% of all claims to 5%. This means that even a smaller carrier, with 20,000 claims per year, would save approximately $42 million in claims costs if it was only half as successful as the pilot example.” That’s a pretty substantial, tangible return on the investment in the software.

2. Identify and Engage the Most Effective Lawyers

Some claims will move forward with a lawyer regardless of early intervention. But all is not lost! Just as all workers’ comp physicians are not created equal, neither are attorneys. Claims teams can still save a significant amount of money, time and frustration simply by involving the right lawyer.

Outcomes-based attorney scoring is common practice. When this scoring uses machine learning algorithms, as the newest solutions do, the best attorneys for a case are right at the fingertips of claims teams. These lawyers can work toward a fair settlement before going through a long, painful litigation process (though in some cases, it is worth it to engage in litigation if demands are unrealistic, which a good lawyer would quickly recognize).

3. Use Smart Tools to Optimize Settlements

It’s worthwhile to adopt AI-based solutions that can lend invaluable insight on optimized settlements for specific cases. Having instant access to quality, detailed information about similar claims can help determine whether to fight or settle a pending lawsuit. Machine learning provides leverage. This saves money.

While avoiding attorneys is always the goal, smart tools can stop the bleeding when it is unavoidable.

See also: Claims Litigation: a Better Outcome?  

AI and machine learning have the capacity to change the upward trajectory in workers’ comp costs. With products and tools incorporating these smart technologies in meaningful ways, the claims process can be transformed from lose-lose to a win-win for both companies and injured workers.