Less than a year after I received my first driver’s license, I had a frightening car accident.
On a foggy Ohio morning, I was driving my two brothers to school when I crossed an intersection and collided with a grey pick up truck traveling without its lights on. It was invisible to me until the moment we made contact with its passenger side door.
After the crash of metal on metal, we all sat in the car for a moment stunned, and thankfully, uninjured.
Then from the back seat my little brother yelled “We’ve got to get out. It’s gonna blow!” After a steady diet of action movies and Starsky and Hutch episodes, he knew the conclusion to every car crash was a giant explosion and fireball.
Of course, there was no explosion or fireball. No one was hurt. But there was serious damage to the front end of my car and to the side panel of the other car. And I was responsible for both. I was in big trouble.
It was then that I realized that auto insurance is a wonderful thing. My insurance company paid for the damage to my car and to the car I struck. To a broke teenager, it seemed like a miracle.
From art to analytics
Back then, and for many years afterwards, the insurers who handled auto accidents like mine used more art than science in determining how to handle a claim. They often relied upon anecdotal experience and the hunches of seasoned domain experts to decide whether to pay a claim immediately or to forward it on to a special investigative unit.
Things are much different today. Driven by tight profit margins and intense competition for customers, insurance claims management has shifted from art to analytics.
Business analytics allows insurers to instantly evaluate a claim from all possible angles. By combining business intelligence with predictive analytics, this technology helps insurers quickly determine whether there is a likely potential for fraud, or if the claim should be paid immediately.
The moment of truth
That’s a powerful capability when you consider that filing claim is the one “moment of truth” between an insurance company and a customer. A positive experience means a satisfied customer. A bad experience could mean you lose the customer, and other friends and family who have been warned away from your company.
And when you consider the financial impact of fraud, overpayments, or ineffective subrogation, the capabilities of business analytics can be fundamental to the health of an insurer’s bottom line.
For example, Infinity Property & Casualty Corporation used business analytics to reduce the time required to refer suspicious claims for investigation by 95 percent. At the same time, it increased its success rate in pursuing fraudulent claims from 50 percent to 88 percent. Also, watch the video below.
That’s an accomplishment that even the most artful team of old school claims adjusters would have trouble matching.
There’s a lot more to the story of how business analytics works and how it is transforming the way insurance companies process claims.
You can read about it in the white paper, “Three ways to improve claims management with Business Analytics.”