A recent study by LexisNexis concludes that insurance companies incorporating more data into the claims process at an earlier stage can realize considerable benefits. According to the study, carriers incorporating third-party data and analytics into their initial claims process, preferably at first notice of loss, can realize greater efficiency, reduced costs, and increased customer satisfaction.
LexisNexis completed a study of more than 10 million features from A.M. Best’s top 20 personal auto carriers. The dataset utilized in the study included 400,000 third-party bodily injury features.
These features were separated by the availability of certain data elements immediately after completion of the claim reporting process and before assignment. “Less Data” features included a telephone number and only one additional data element or had no telephone number but all the other elements; “More Data” features included a telephone number and two or more other data elements.
Comparing bodily injury settlements between the Less Data and the More Data groups, it became clear that having multiple data fields earlier in the claims process resulted in lower average severity payments, expense levels, and cycle time.
For example, in the Less Data category, the average bodily injury loss was $7,359; having More Data reduced the average loss by 15%, to $6,255. Furthermore, the average duration of the claims process went down from 116 days to 110 days.
As insurance carriers face increasing pressures to reduce expenses, they will look closely at the efficiency and effectiveness of their claims function. Based on the results found in the study, the authors conclude that the solution is to incorporate real-time data and analytics throughout the claims process.
Click on the link for more information about the survey, titled “More Data, Earlier: The Value of Incorporating Data and Analytics in Claims Handling.”