Category Archives: Claims Technology

5 Actionable Strategies for Emerging Trends and Challenges for Claims Departments in 2025

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It’s been an interesting year and 2025 is shaping up to be another exciting year for the insurance industry.  As 2024 ended we saw some interesting market trend reports from leading consulting and industry firms.  As the insurance landscape evolves, claims departments face a range of new trends and challenges. Drawing insights from recent industry reports and past discussions on best practices, we will explore the key dynamics expected to shape claims handling in 2025, along with 5 actionable strategies for adaptation.

Rising Costs and Litigation Severity

Claims departments are grappling with the escalating costs of litigation, driven by trends such as social inflation and nuclear verdicts. The Marsh McLennan MMA Q3 2024 Market Trends Report highlights how litigation funding abuse contributes to rising claim costs, particularly in casualty markets:

“Nuclear verdicts, driven in large part by litigation funding abuse, are a significant factor in the pace of change in the casualty market”​.

The McKinsey Global Insurance Report further emphasizes how inflation and rising costs are straining claims operations:

“ Corporate legal defense spending on class action lawsuits in the United States increased by 8 percent in 2022 and by 5 percent in 2021. This leads to higher claims costs and ultimately has a negative impact on affordability across the industry “​.

Digital Transformation and AI Integration

The integration of AI and digital tools into claims operations has become essential for enhancing efficiency. As noted in the PwC Insurance 2025 Report:

“ Insurers still lack speed and agility due to inherent complexities such as legacy systems and traditionally siloed operations. A fresh approach to digital is needed to drive a competitive advantage that can be sustained. “​

Similarly, the Global Insurance Report highlights the potential of AI to transform claims processes:

“Generative AI will enable carriers to rethink and innovate the end-to-end value chain”​.

Climate Risks and Natural Disasters

The insurance sector faces increasing pressure from climate-related risks, with severe weather events becoming more frequent. According to the MMA Q3 2024 Report:

“ The flood protection gap is widening. Since the 1990s, the cost of flood damage has roughly doubled each decade. The federal government issued two disaster declarations for floods in 2000. As of October 22, 2024, it has issued 66. “​.

The PwC Insurance 2025 Report reinforces this trend by underscoring the criticality of sustainability in claims management:

“ The growing threat of climate change poses systemic physical and transition risks, with direct implications for the insurance industry “​.

Customer-Centric Claims Models

With customer expectations shifting, transparency and efficiency in claims handling are more important than ever. The PwC Insurance 2025 Report highlights the rising trust gap in the insurance industry:

“In a world in which trust in businesses and governments is declining, trust in financial

institutions is near an all-time low….Trust is fundamental for insurance, and insurers clearly have a much bigger role to play in our society and economy than just protecting risks. ​.

Incorporating customer-focused technologies into claims processes can address these challenges:

“ Continued rapid advancements in digital and analytics capabilities, from inside and outside the industry, have put many players under pressure. We’ve seen a sharp increase in digital efforts and adoption in areas like distribution, operations, and claims. However, insurers still lack speed and agility due to inherent complexities such as legacy systems and traditionally siloed operations. A fresh approach to digital is needed to drive a competitive advantage that can be sustained. “​.

Operational Efficiency Amid Economic Pressures

Economic uncertainties, including inflation and volatile interest rates, demand innovative approaches to operational efficiency. As stated in the Global Insurance Report:

“ Profitability challenges were acute across markets as inflation increased. Net combined ratios grew between 2021 and 2023, most notably in the United Kingdom (where combined ratios and inflation increased by 16 percentage points and 17 percent, respectively), the United States (five percentage points and 12 percent, respectively), and Australia (three percentage points and 13 percent, respectively)”​.

5 Actionable Ways to Future-Proofing Claims Departments

As the insurance industry navigates 2025, claims departments must evolve to address emerging challenges while seizing opportunities for innovation. From managing climate risks to adopting AI and digital transformation, success lies in adaptability and forward-thinking strategies.

By investing in technology, fostering customer-centric models, and leveraging data-driven insights, insurers can stay ahead in a competitive market.  Building on themes explored in previous Claims Spot articles, the following suggestions aim to address 2025’s challenges while enhancing operational efficiency, customer satisfaction, and resilience in claims departments.

1. Prioritizing Accurate Reserving and Trend Analysis

In “The Critical Role of Timely and Accurate Practices in Claims Management”, the importance of consistent reserving and trend analysis is emphasized as foundational to claims operations. This remains critical as we approach 2025, where accurate reserves will play a pivotal role in navigating increasing claims severity and unpredictability.

“Think of reserves as the financial shock absorbers of the insurance world. When set correctly, they help cushion the impact of claim payouts, ensuring stability and solvency”​.

2025 Actionable Strategies:

  • Establish adaptive reserving frameworks that account for emerging risks like climate-related disasters and inflation-driven costs.
  • Invest in advanced analytics tools to monitor and predict reserve adequacy trends.
  • Conduct regular reviews of reserve practices to ensure alignment with real-time market changes.

2. Enhancing Litigation Management with Data

As detailed in “Taming the Claims Severity Beast: A Data-Driven Approach to Litigation Management”, rising legal costs and the threat of nuclear verdicts call for more robust, data-driven litigation management. Proactively identifying high-risk cases early will help claims departments mitigate the financial and operational impacts of social inflation.

“Leveraging data and AI can significantly improve outcomes, with predictive models offering a roadmap for managing high-severity claims more effectively”​.

2025 Actionable Strategies:

  • Deploy early case assessment protocols, integrating AI to prioritize and streamline resource allocation.
  • Build predictive analytics models that identify litigation-prone cases, helping departments prepare defense strategies or negotiate early settlements.
  • Invest in training claims professionals to interpret and apply data insights effectively.

3. Streamlining FNOL with Advanced Technology

The FNOL process, discussed in “Streamlining the First Notice of Loss (FNOL) Process: Best Practices and Technologies”, sets the tone for the entire claims journey. By incorporating customer portals and AI, insurers can enhance efficiency while maintaining a strong human touch for complex claims.

“A robust customer portal that serves as a one-stop-shop for FNOL and claim management is a game-changer, offering ease of reporting and reducing input errors”​.

2025 Actionable Strategies:

  • Introduce or enhance 24/7 FNOL customer portals, incorporating features like real-time updates, photo uploads, and automated triage.
  • Combine natural language processing (NLP) with AI to extract critical information from FNOL reports, reducing the need for manual intervention.
  • Train FNOL staff to blend empathetic communication with efficient problem-solving for distressed customers.

4. Balancing Innovation with Implementation Challenges

In “Navigating the Choppy Waters of Claims Technology Implementation”, the focus is on integrating new technology without disrupting existing processes. As 2025 approaches, adopting a measured, collaborative approach to technological transformation is essential.

“Think of it as a tech tango—new and old dancing in perfect sync. The goal is to enhance processes without sacrificing familiarity or efficiency”​.

2025 Actionable Strategies:

  • Map current claims processes to identify areas where technology can seamlessly enhance efficiency.
  • Foster collaboration between claims, underwriting, and actuarial teams to ensure holistic solutions.
  • Invest in phased rollouts with iterative improvements to balance technological advances and operational stability.

5. Tackling Social Inflation with Proactive Measures

In “Social Inflation Has Commercial Casualty Losses Up 11% Over the Last 5 Years”, strategies like predictive analytics and advanced technology are suggested to combat the rising costs of claims driven by litigation and societal factors.

“Predictive models can help claims departments anticipate high-severity cases, allowing for proactive strategy adjustments in reserving, settlements, and litigation decisions”​.

2025 Actionable Strategies:

  • Expand data analytics capabilities to monitor and adapt to societal trends influencing claims costs.
  • Develop jurisdiction-specific strategies for high-litigation areas, ensuring preparedness for nuclear verdicts.
  • Build strong legal partnerships and networks to negotiate favorable outcomes in complex cases.

Incorporating These Changes

By integrating these suggestions, claims departments can adapt to the multifaceted challenges expected in 2025. Whether through accurate reserving, innovative FNOL processes, or data-driven litigation management, these changes will ensure claims operations remain agile, efficient, and customer-focused.

What steps is your organization taking to implement these strategies in 2025? Share your plans and insights below!

Thinking About 2025: Driving Innovation in Insurance Claims Technology

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The U.S. insurance industry continues to exhibit its remarkable resilience, as underscored by its impressive financial turnaround in recent years. However, sustaining this momentum and preparing for future challenges demand more than just traditional strategies. As highlighted by the exceptional leaders featured in Insurance Business America’s Hot 100 2025, the road ahead involves fostering technological innovation in claims processing and ensuring the right expertise is on board to drive these initiatives.

The Call for Claims Technology Innovation

The modern insurance landscape necessitates a profound shift in how claims are managed. From the First Notice of Loss (FNOL) process to complex litigation management, the integration of advanced claims technology has proven to enhance efficiency, reduce costs, and improve customer satisfaction.

For example, AI-driven tools like predictive analytics and natural language processing are now being used to:

  • Identify high-risk claims early: This enables insurers to allocate resources effectively, mitigating costs and risks associated with prolonged claims.
  • Enhance fraud detection: Machine learning models can analyze patterns in data to detect anomalies that may indicate fraudulent activity.
  • Automate routine processes: By automating document reviews and data entry, insurers can free up human resources for more strategic tasks.

These advancements align with the pressing need for seamless systems integration. As noted in the industry, the “tech tango”—the harmony of old and new systems—enables companies to maximize the benefits of their investments without disrupting ongoing operations.

Hiring the Right Consultants for Success

Innovation in claims technology is a complex journey that involves navigating challenges such as system integration, stakeholder buy-in, and operational disruptions. This is where the role of specialized consultants becomes invaluable. It is critically important to recognize the gaps and seek complementary expertise to bridge them effectively.

Hiring the right consultants can ensure:

  • Objective assessments: Independent experts provide unbiased evaluations of existing systems and processes.
  • Tailored strategies: Consultants bring a wealth of experience across different industries, enabling the customization of solutions that align with an organization’s unique needs.
  • Streamlined implementation: With dedicated project management expertise, consultants help mitigate scope creep and ensure timely execution of technological initiatives.

Furthermore, consultants facilitate cultural change within organizations by aligning technology goals with broader business strategies. They act as catalysts for innovation, ensuring that both technological tools and the people using them are set up for success.

Balancing Technology with Human Expertise

The future of claims innovation lies in striking the perfect balance between automation and human oversight. As seen with solutions like  AI-driven FNOL process, technology can handle simple claims efficiently, but complex cases still require human judgment and empathy.

Investing in robust training programs ensures that staff can harness the full potential of new technologies. It’s equally critical to maintain transparency in AI-driven decisions, fostering trust among both employees and customers.

Charting the Path Forward

As the U.S. insurance market is poised to reach $4.50 trillion by 2029, the stakes for staying competitive are higher than ever. Embracing claims technology innovation and enlisting the right experts to guide this transformation are no longer optional—they are essential strategies for thriving in a rapidly evolving industry.

The journey to modernization requires bold leadership, strategic investments, and a commitment to enhancing both technological capabilities and human expertise. By addressing these areas, insurers can transform claims management from a cost center into a driver of customer satisfaction and operational excellence.

What steps is your organization taking to innovate in claims technology? Share your insights and experiences in the comments below!

Improving Litigation Management: A Data-Driven Approach

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Addressing the Challenges of Accurate Data

The integration of data analytics and predictive modeling into litigation management can revolutionize how insurers handle claims, especially considering some of the new technologies hitting the market.  For years the focus has been on billing data to help manage counsel and litigation. This type of information provided some insight into counsel performance and compliance with billing guidelines but did not really translate to better litigation management. I would argue that some of this taken the effectiveness of litigation in the wrong direction but that is an article for another day. 

The success of this data-driven approach relies heavily on the quality and consistency of the data itself. For many claims departments, the hurdles of poor data input, unstructured information, and inconsistent data formats remain significant challenges. In addition, busy adjusters are being asked to spend more and more time inputting data which is taking away from their primary function as claim professionals. Addressing these issues is essential to unlocking the full potential of analytics in reducing litigation costs and improving outcomes.

Challenges in Achieving Accurate Litigation Data

1. Inconsistent or Incomplete Data Input by Claims Professionals

Claims professionals often prioritize immediate claim resolution over data entry, which can lead to missing, incomplete, or inaccurate information. Key details about litigation—such as court timelines, case strategy, or witness information—may be overlooked during input, reducing the reliability of downstream analytics.

2. Unstructured Data in Litigation Reports and Court Documents

Much of the critical information for managing claims litigation resides in unstructured formats, such as adjuster notes, attorney reports, and scanned court documents. Extracting insights from this data requires significant manual effort or sophisticated technology, which can slow down processes or introduce errors.

3. Data Inconsistency Across Systems

Data from different sources—claims systems, legal databases, and external platforms—often lacks standardization. Disparate formats, conflicting terminology, and varying levels of detail make it difficult to integrate and analyze data effectively.

Strategies for Overcoming Data Challenges

1. Improving Data Input Quality

  • Simplify Data Entry Interfaces: Design claims systems with intuitive, user-friendly interfaces that guide adjusters to input essential information without overwhelming them.
  • Incentivize Accurate Data Collection: Recognize and reward claims professionals for thorough and accurate data entry as part of their performance metrics.
  • Automate Data Entry: Leverage technologies such as natural language processing (NLP) and AI to extract relevant information from adjuster notes and reports, reducing manual workload and errors.

2. Structured Data Extraction from Unstructured Sources

  • Implement Text Mining Tools: Deploy NLP and machine learning algorithms to scan unstructured data sources, such as litigation reports and court documents, for relevant information. These tools can identify key data points like settlement ranges, precedent cases, and critical deadlines.
  • Centralized Data Repositories: Consolidate unstructured and structured data into a centralized system, allowing claims teams to access and cross-reference information more effectively.
  • Invest in Document Digitization: Use optical character recognition (OCR) and AI-powered data extraction to digitize physical documents and integrate their contents into claims systems.

3. Standardizing and Validating Data Across Systems

  • Create a Unified Data Schema: Establish a standardized framework for entering and storing claims and litigation data to ensure consistency across all systems and teams.
  • Cross-System Integration: Use middleware or APIs to synchronize data from disparate systems, ensuring that all platforms are working with the same information.
  • Regular Data Audits: Conduct periodic reviews of data quality to identify and address inconsistencies, duplicate entries, or missing information.

Enhancing Litigation Management with Reliable Data

Once the challenges of data quality are addressed, the true potential of analytics in litigation management can be realized:

  • Early Identification of High-Risk Cases: With accurate data, predictive models can reliably flag cases likely to result in significant litigation costs, allowing early intervention.
  • Improved Resource Allocation: Better data consistency enables teams to allocate legal and claims resources more effectively, focusing efforts on high-priority cases.
  • Enhanced Outcome Prediction: Clean, standardized data improves the accuracy of predictive analytics, helping to forecast settlement ranges and litigation timelines.

Building a Culture of Data Excellence

To address these challenges, claims leaders must prioritize a cultural shift toward data excellence:

  • Training and Education: Provide regular training for claims professionals to emphasize the importance of accurate data entry and how it supports better litigation management.
  • Collaborative Tools: Use tools that facilitate collaboration between claims handlers, legal teams, and IT departments to ensure data flows smoothly across functions.
  • Continuous Improvement: Establish feedback loops to refine data entry processes and adjust technology solutions based on user experiences.

Conclusion: A Foundation for Data-Driven Success

Accurate and consistent data is the foundation of a successful data-driven approach to litigation management. By addressing the root challenges—poor data input, unstructured information, and inconsistency—claims departments can unlock the full potential of predictive analytics and streamline litigation processes. While technology plays a vital role, building a culture that values data accuracy and consistency will ultimately ensure sustained improvements in litigation management.

How does your organization ensure data quality in litigation management? Share your strategies in the comments below, and let’s explore solutions to elevate our industry together.

Why Engaging an Independent Claims Expert is so Critical to Successful Technology Implementation

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Yes, I am biased. I am an independent consultant, but I have also worked at a large consulting firm.  The current insurance environment is in a rapid state of change, where claims departments are struggling to be competitive and efficient due to increased claims volumes and complexities. Technology could transform every step of the claims process, from intake through resolution—but successful implementation requires more than just technological know-how. But to make that a reality, subtle understanding is needed from the claims landscape itself.


To bridge this chasm, what insurance leaders require is not some standard-issue consulting firm but a professional claims expert well-versed in the deeper nuances of the claims process. For large implementations that span multiple years the large consulting firm can be an invaluable resource.  However, when the implementation is small or your company is smaller,  hiring an independent claims consultant can make all the difference in realizing a technology implementation that not only transforms the operations but does so with efficiency and precision.

1. Process-Driven Technology Integration: Understanding Claims from the Inside Out


The processing of claims with high levels of accuracy and efficiency, but with empathy nonetheless, constitutes the core mission of the claims department. Without an implementation approach which places the process of the claim at the forefront, technology can quickly turn into a disruptive force rather than a supporting tool. Unlike larger consulting firms, independent claims consultants focus on bringing in technology to meet the unique workflows and departmental business objectives. This ensures that the process of claims drives the technology, not the other way around.

2. Solutions Customized with Flexibility for Real-World Claims Challenges

Independent claims consultants bring an unprecedented level of agility and customization that larger firms simply cannot match. Because they are not bound by rigid frameworks, they can move more nimbly to meet the particular needs of each department, from property to casualty claims, without unnecessary layers of oversight. This will introduce flexibility for active consultants to tailor solutions within the existing ecosystem, including claims data analytics, fraud detection, and maintaining the human touch necessary in ensuring customer satisfaction.

The scalability of the solution will also be catered for by a focused consultant to enable your department to evolve with the technology over time. They have practical experience in how to spend each working day projecting the daily challenges an adjuster and manager face so that the technologies implemented will be as pragmatic as they are innovative.

3. Cost-Effectiveness: Maximize ROI without the Big-Firm Overhead

One of the values in retaining an independent consultant over a large consulting firm often has to do with bottom-line economics. Independent claims experts are unencumbered by all of the trappings and demands of higher overhead-greater office space, for example, more administrative personnel, an extensive marketing program-and maintain a lean approach focused exclusively on delivering results. That is to say, more of your budget is directly invested in the project, yielding a larger return on investment for your claims department.

Another major factor: essentially, independent consultants have a stake in the success of every case. They will work hand-in-hand with internal teams, offering hands-on guidance throughout the process. This kind of processing will typically result in faster project turnarounds and faster adoption, which means a faster return on investment.

4. Proven Process: How a Claims Consultant Drives Successful Implementation

New technology implemented within a claims department requires a clear, structured approach beyond generic project plans. Here is one specific way an independent claims expert would drive a successful implementation, step by step:

  • • Assess and Plan: First, take a deep dive into where current claims workflows enhance pain points, resource needs, and department goals. The result is that the technology solution will focus on the particular needs of the claims department, not just industry standard needs.
  • • Solution Design: Having worked in close cooperation with the department heads, the consultant now designs the solution to be adapted for smooth integration into the workings of the department. The focus is then on nuances of the claims process, so that one may target areas where technology will add value without disrupting processes.
  • • Pilot Testing and Iteration: Before the rollout, pilot testing paves the way for live insights and iterations. A claims-focused consultant can quickly identify and rectify any issues to make technology work right in the life conditions of claims.
  • • Training and Adoption Support: The successful implementation of technology requires user adoption. More often, independent consultants provide hands-on training, tailored for different roles within the department. They help each member of the team understand how the new technology makes their workflow easier and more intuitive to perform their tasks.
  • • Ongoing Review and Adjustment: The true claims expert knows that after implementation, the work is not over. They remain involved with performance monitoring, suggesting adjustments, and ensuring the technology meets their changing needs.

5. Partnership, Not Just Completion of the Project

Probably one of the most valued elements in working with an independent claims consultant is the relationship they will build with your team. Unlike larger consulting firms that might simply focus on delivering the project and moving on, independent experts truly invest in a partnership. They work side-by-side with internal teams, understand their challenges, and adjust in real time to feedback for long-term success. This harmony makes for trust and confidence in the new technology as team members learn to fully welcome the change. Over time, the partnership offers consistent ways it assists departments in not just attaining immediate implementation goals but also in fostering a culture of continuous process improvement and innovation.

The Strategic Advantage of Partnering with a Claims Expert


The challenges of claims implementation require much more than a one-size-fits-all solution. In engaging an independent claims expert, C-suite executives and claims leaders receive a partner focused on expert-level talent, flexibility, and hands-on involvement their large consulting firm counterparts often cannot match. Using their specific knowledge, they make sure that new technology underpins the claims process for tangible gains in greater efficiencies, customer satisfaction, and financial performance, amongst other benefits. The right consultant will be the difference between ‘disruptive change’ and a ‘transformative solution’ in today’s competitive insurance landscape. Embrace expertise that puts your claims process first, and watch technology become an enabler of growth rather than just another operational hurdle.

Taming the Claims Severity Beast: A Data-Driven Approach to Litigation Management

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In today’s landscape of escalating lawsuit costs and economic uncertainty, managing litigation severity has become a critical challenge for claims departments (see Social Inflation is up). The question is: how can we effectively address this issue without compromising efficiency or breaking the bank? Let’s explore a data-driven, technology-powered approach to litigation management that can help tame the claims severity beast.

Understanding Claims Severity

Claims severity is more complex than just the dollar amount of a settlement. It encompasses financial costs, time invested, and even emotional toll. Influenced by factors ranging from company procedures to unexpected events, understanding severity is crucial for developing effective litigation management strategies.

A striking real-world example of claims severity comes from the trucking industry. According to a 2020 study by the American Transportation Research Institute (ATRI), the average cost of a crash involving a large truck increased from $120,000 in 2009 to $182,000 in 2019 – a staggering 52% increase. Even more alarming, crashes with injuries saw costs rise from $195,000 to $428,000, a whopping 120% increase. (Understanding the Impact of Nuclear Verdicts on the Trucking Industry.” June 2020)

This example illustrates how factors like rising medical costs and increased legal fees can dramatically impact claims severity over time. It’s not just about the initial incident anymore – the long-term implications and escalating costs play a significant role in the overall severity of a claim.

Leveraging Data as a Strategic Asset

In the battle against claims severity, data is your most powerful asset. Historical cases, claims records, and legal documents form a rich repository of information. With proper analysis, this data can reveal patterns, predict high-risk claims, and even prevent problematic cases before they escalate. It’s about transforming raw information into actionable insights.

A striking example of leveraging data and AI in claims management comes from Lemonade, a disruptor in the insurance industry. Lemonade uses AI extensively in claims processing, employing a combination of machine learning, chatbots, and computer vision. Their AI system, aptly named “AI Jim,” handles the entire claims process for simple cases, from initial report to payment. The results are nothing short of remarkable: 30% of claims are settled instantly, with the record for the fastest claim processed standing at an astonishing 3 seconds. Perhaps most impressively, Lemonade has managed to reduce its claims expense ratio to just 2%, significantly outperforming the industry average of 10-15%. This case demonstrates the transformative potential of AI in claims management, showing how it can dramatically improve efficiency, speed, and cost-effectiveness. https://www.linkedin.com/pulse/ai-insurance-streamlining-underwriting-claims-andre-ripla-pgcert-4qdye

Another powerful example of leveraging data and technology comes from Zurich Insurance. They implemented an AI-powered system to handle property and injury claims, utilizing machine learning and natural language processing. This advanced system reviews medical reports and assesses the severity of injuries to determine appropriate compensation. The results were impressive: claims processing time was reduced by 50%, consistency in claims decisions improved by 25%, and they saw a significant reduction in operational costs. This case clearly demonstrates how AI and data analytics can dramatically improve claims management efficiency while also ensuring more consistent and fair outcomes for claimants. https://www.linkedin.com/pulse/ai-insurance-streamlining-underwriting-claims-andre-ripla-pgcert-4qdye/

These examples demonstrate the power of leveraging data to not only improve efficiency but also to proactively manage and reduce claims severity.

Embracing Technological Tools

Artificial Intelligence and machine learning are no longer just buzzwords; they’re essential tools in modern litigation management. These technologies can process vast amounts of data, identify hidden patterns, and predict outcomes with increasing accuracy. 

Automation tools also play a crucial role, handling routine tasks and freeing up your team to focus on strategy. Effective communication tools ensure that all stakeholders remain informed and aligned throughout the litigation process.

Implementing Best Practices

Deploying new tools and strategies requires a thoughtful approach. Consider these best practices:

1. Foster collaboration between all stakeholders, from insurers to legal teams to front-line claims assessors.

2. Establish clear objectives and Key Performance Indicators (KPIs) to measure strategy effectiveness.

3. Maintain accurate data – the adage of garbage in garbage out is never truer than with litigation data. Make the time and investment and get it right.

4. Use technology to enhance, not replace, human judgment and decision-making.

5. Invest in continuous training to ensure your team can effectively utilize new tools and strategies.

The Importance of Action

Managing claims severity isn’t solely about cost reduction; it’s about creating a more efficient, effective claims process that benefits all parties involved. By leveraging data, embracing technology, and implementing proven strategies, we can significantly improve litigation management outcomes.

The tools and strategies are available, and the potential benefits are substantial. It’s time for claims leaders to take action and implement these approaches to effectively manage claims severity.

What strategies have you employed to address claims severity in your organization? Share your experiences in the comments below – let’s continue to learn from each other and advance our industry practices.

Navigating the Choppy Waters of Claims Technology Implementation

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Let’s face it, implementing a new technology into existing processes and systems is no easy task. But in today’s fast-paced insurance world, it’s not just about upgrading tech—it’s about transforming your entire claims ecosystem. So, how do we ensure that this shiny new penny enhances rather than disrupts our current processes? Buckle up, folks, because we’re about to dive into the deep end.

1. Map It Out and Take Your Time Doing It

Before you jump headfirst into this tech tornado, you need to know where you’re standing. As I like to say, “knowing where you are is just as crucial as knowing where you want to go.” So, roll up your sleeves and get mapping of your existing processes and how the new technology will fit into that process. Assess your current processes, systems, and challenges. Trust me, this homework will pay off when you’re not lost in the implementation wilderness later.

2. It’s Not Just About Claims, People

In some instances, the impact of a new system initiative goes way beyond the claims department. Don’t adopt new technology in a vacuum. This isn’t just a claims thing—it’s a business thing. Drag your underwriters and actuaries into the mix when needed. Their input will help create an enterprise-wide solution that improves overall business outcomes, not just makes claims handling easier. Remember, we’re all in this together.

3. Executive Champion: Your New Best Friend

A project needs an executive champion who can move mountains (or at least meetings). This isn’t a part-time gig—you need someone who’s all in. Yes, it’s a big ask, but the payoff in streamlined decision-making will be worth every executive hair that turns grey in the process.  It’s also important for change management to ensure executive buy in and not just in approving the project but being involved in the process.

4. Passion: Not Just for Romance Novels

Your project team needs to live and breathe this implementation. They should be more excited about this project than a kid on Christmas morning. We like to ensure that there is a focus on minimizing disruption and maximizing ROI. That’s the kind of passion we’re talking about and such passion will be infectious to help with adoption.

5. Scope Creep: The Silent Killer

It’s tempting to keep adding bells and whistles, but remember—every change needs to bring value. Before you add that shiny new feature, do a cost-benefit analysis. Some enhancements might take time to show their worth, so be patient. Measure the impact over time, and don’t be afraid to admit if something isn’t working out. No system or technology will be perfect right out of the box.  Teams need to use and learn how best the system integrates in the process.  Get it working and look at future enhancements as part of an iterative development project.

6. Integration: The Name of the Game

It is so important to try and seamlessly weave cutting-edge technology into your existing claims ecosystem. This isn’t about out with the old, in with the new. It’s about creating a beautiful harmony of efficiency and familiarity. Think of it as a tech tango—new and old, dancing in perfect sync.

7. Customize, But Don’t Go Crazy

Yes, tailor those workflows to match your unique claims processes. But don’t go overboard—you’re implementing a new and modern approach, not building a spaceship. Find that sweet spot between customization and out-of-the-box functionality. Your future self will thank you when it’s time for system updates. Scope creep can be put in check and adoption rates will go up.

8. Remember the Humans

At the end of the day, your fancy new system is only as good as the people using it. Invest in training and make sure that interface is more intuitive than your smartphone. I like to stress that a user-centric approach is key. After all, a technology that no one can use is about as useful as a chocolate teapot.

9. Measure, Tweak, Repeat

Once your system is up and running, don’t just sit back and admire your handiwork. Keep fine-tuning for optimal performance. Use those data analytics to spot areas for improvement. Remember, in the world of claims technology, standing still is the same as moving backward.

Implementing a new system might feel like trying to change a tire while driving, but with the right approach, it can transform your operations faster than you can say “subrogation.” The goal isn’t just new tech—it’s creating a claims process so smooth, it helps claims professionals do their job better.  We all love the idiom of work smarter not harder!

So, claims leaders, what’s your secret sauce for successful system implementations? Share your wisdom in the comments below—let’s learn from each other and keep this industry moving forward!

Leveraging AI as a Decision Support Tool in Claims Processing: A Balanced Approach

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In the rapidly evolving landscape of insurance claims operations, Artificial Intelligence (AI) has emerged as a powerful ally. However, its true potential lies not in replacing human judgment, but in enhancing it. As we navigate this technological frontier, it’s crucial to develop a strategic plan for implementing AI as a decision support tool in claims processing, ensuring we maintain the critical balance between efficiency and ethical considerations.

The key to successful AI integration lies in viewing it as a sophisticated assistant rather than an autonomous decision-maker. This approach harnesses AI’s analytical power while preserving the irreplaceable human elements of empathy, complex reasoning, and ethical judgment – particularly vital when dealing with diverse claim types requiring different levels of oversight.

To effectively implement AI as a decision support tool, insurers should consider a multi-faceted plan:

  1. AI-Powered Insights: Utilize AI to analyze vast amounts of data, providing claims adjusters with comprehensive insights, historical comparisons, and potential settlement ranges. For instance, in complex liability cases, AI can quickly analyze historical claim data, legal precedents, and policy details to offer a comprehensive overview and suggest settlement ranges.
  2. Bias Mitigation: Implement AI systems designed to identify and flag potential biases, both in historical data and in real-time decision-making processes. This helps ensure fair and consistent outcomes across similar claims, addressing unconscious biases that human adjusters might have.
  3. Explainable AI: Prioritize AI models that provide clear rationales for their recommendations. This transparency allows human adjusters to understand, validate, and, when necessary, override AI suggestions, fostering trust in the system.
  4. Continuous Learning and Feedback Loops: Establish mechanisms for human decisions to refine AI models over time. This ensures the system evolves alongside changing regulations, market conditions, and industry best practices.
  5. Customizable Thresholds: Develop systems that allow claims departments to set and adjust thresholds for AI autonomy based on their risk appetite and regulatory requirements. This flexibility ensures that human oversight can be dynamically allocated where it’s most needed.
  6. Cross-functional Collaboration: Engage claims adjusters, data scientists, and ethicists in the development and ongoing refinement of AI decision support tools. This multidisciplinary approach helps balance technical capabilities with practical and ethical considerations.
  7. Regular Ethics Reviews: Conduct periodic reviews of AI-assisted decisions to ensure they align with the company’s ethical standards and values. This process should involve both internal stakeholders and external ethics experts.

By thoughtfully integrating these elements, insurers can create a synergistic environment where AI amplifies human expertise rather than attempting to replace it. This approach not only enhances operational efficiency but also maintains the trust of policyholders by demonstrating a commitment to fair, ethical, and empathetic claims resolution.

It’s important to note that the level of AI support may vary across different types of insurance claims. For straightforward cases, like minor auto damage, AI can handle most of the process autonomously. However, for complex scenarios such as liability disputes or severe injuries, human expertise becomes indispensable, with AI serving primarily as a decision support tool.

Implementing AI as a decision support tool also helps mitigate potential bad faith risks. By maintaining human oversight, especially for claim denials, and ensuring transparency in AI decision-making processes, insurers can avoid the perception that claims are being unfairly handled by automated systems.

By viewing AI as a sophisticated decision support tool rather than a replacement for human judgment, insurers can significantly enhance efficiency and consistency in claims processing while maintaining the critical human element. This balanced approach not only improves operational performance but also builds trust with policyholders by demonstrating a commitment to fair, ethical claims resolution in an increasingly AI-driven industry.

3 Types Of Claims Metrics Every Department Should Be Looking At

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There is gold at the end of the rainbow!

Good news! – claims departments are now flooded with great data.

Seems like great news doesn’t it. It is great news, or can be, if you’re using the data to help improve the operations, lower cost or predict the future. However, many firms aren’t using the data they have to provide valuable information for the operation.

With the advent of more modern claim technology there has been a push to input more and more information about claims. Claims professionals are being asked to capture very specific fields of information presumably to be used by others within the organization.  In addition, more sophisticated data models are combining claims data with underwriting and financial data that when used correctly can be a treasure trove of information.

With all that information available what is the best way to use the information?

At the very least data should be used to manage the operation, reveal trends, or be predictive.

Metrics to Manage the Operations

At the core, information coming out of the claims system should be used to manage the people handling files. Daily, weekly, monthly quarterly and yearly metrics around performance issues should be used to ensure claims professionals and support staff are performing at their best, responding to claims promptly and managing workloads and staffing levels.  Typical metrics to manage the operation would center on matters coming and going out (i.e., open, closed, closing ratios); aging reports (i.e., throughput, time from receipt to setup, open to close); workloads (i.e., caseloads and closing ratios by adjuster); or financial in nature (i.e. reserve changes from one period over another, average reserves, total paid).

Metrics to Reveal Trends

There are trends in your data if you know where to look. Trends in loss frequency and severity, which may be caused by external factors, such as legislative, environmental and economic forces, are all developed from claims data. Trending claims data will help underwriters ensure pricing and terms are appropriate and allow problems to be addressed before they become disasters. There are numerous examples of companies that succeeded because they were able to review claims trends and adjust their business before it was too late. There are conversely many companies that failed because they did not have or use their claims data to spot deteriorating books of business in enough time to address it. Information from claims is the lifeblood of the organization and should be identified and regularly shared to help the organization make better decisions about loss reserves, risks, investments, and resources.

Captives and self-insured can benefit even more on using data to trend losses and lower costs to the bottom line. In an article in Business Insurance about how Captive Insurers Provide Owners With Key Risk Management Tools, the authors discuss how Direct TV used claims data to trend key issues that allowed them to significantly improve results in their Workers’ Comp program:

DirecTV Inc. used claims data from the past several years …to help it manage claims more aggressively for its installation crews…DirecTV used the claims data identified to implement changes to its safety programs, its training programs and its return-to-work strategy…. The claims data also showed opportunities to improve fleet risks. Over a three-year period, the safety changes resulted in a 43% reduction in calls on the Driver Alert phone line. The data also found delays in reporting claims and lengthy lost time due to worker injuries. As a result, the company implemented a formal return-to-work program, which resulted in a significant decrease in lost time, and used additional training on claims reporting to reach the point where 91% of claims now are reported within three days of an incident.

Metrics to Be Predictive

Using data is not just about spotting trends but predicating outcomes. Using predictive analytics is not about deciding claim outcomes without the involvement of skilled claims professional, but rather it is about providing a tool to assist in the process. Predictive analytics can correlate multiple aspects of data and draw conclusions in an instant that claims professionals would not be able to do without hours of analysis. Predictive analytics tools are being successfully implemented to combat fraud and streamline the claims intake process as Gen Re noted in Predictive Modeling – An Overview of Analytics in Claims Management, some other uses of  uses of predictive analytics include determining:

  • Outlier Claims
  • Reserve and Settlement Values
  • Defense Strategy
  • Litigation Expense Management
  • Subrogation Potential

The benefits, if used correctly, are limitless when robust data sets now common in the claims world are used. More and more companies are using analytics to improve operations. In fact, according to a Towers Watson study in 2012, 63% of Chief Claims Officer’s surveyed stated they were starting to use predictive analytics in in their claim’s operations (see study).

Predictive modeling has been limited in the past because systems were not as robust and the amount of data available to run data models was limited. Times, however, have changed and most carriers should have more than their share of data that could prove invaluable. Of course data integrity must be as clean and accurate as possible for these new models to be effective. Regardless, the possibility for significantly improving claims outcomes is compelling.

 How are you using data and analytics?

Claims Predictive Modeling: Using The Numbers To Improve Operations And A Change Worth Exploring

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A recent article in Claims Magazine discusses the “Human Capital Impact of Using Predictive Models.”  The article, written by the presented by consultants in the Actuarial, Risk & Analytics practice of Deloitte Consulting, discuss what it means to the claims professionals and suggests methods for implementing a Claims Predictive Model.

What Is Claims Predictive Modeling?

Claims Predictive Modeling (CPM) is one of the big buzz words in the industry. After a few decades of improving claims technology systems and creating vast databases of claims information, CPM is an attempt to use that information more effectively. It is an attempt, as the article infers, to provide better information to the claims handler to let them use their skills to make better decisions, apply resources more effectively and really allow claims departments to do more with less.

As the article notes:

“Leveraged effectively at first notice of injury or loss (FNOI/L) and throughout the lifetime of the claim, advanced analytics can have an impact on various aspects of the claims lifecycle: claims assignment, special investigative unit (SIU) referral, medical case management, litigation, subrogation, escalation and, ultimately, claims settlement and outcome.

No who wouldn’t want to have a positive impact on claims settlements and outcomes?

Change Can Be Good

Claims professionals are a rightfully proud group. We have always taken on the role of analyst and investigator and understand that there are nuisances in claims that a computer can’t possibly see. We live in the world that handling claims is a science and an art that requires a combination of elements and not just data on a spreadsheet. CPM and other tools are inherently perceived as a threat to the professional as another way to diminish our skilled judgment.  We point to years of decreasing staff and being asked to do more with less as evidence of the erosion of our profession. Unfortunately, as the industry continues to struggle attracting new qualified staff, there may be some truth to these perceptions that the profession is under attack.

Regardless, we are an industry that needs to embrace and welcome new technology.  CPM is not a means to further refine the profession to the point of not needing a true skilled professional.  The tool is designed to highlight claims with greater risks and focus the claims handler’s attention to where it is best served. While the statistics vary slightly from company to company it is fairly well understood that 10-20% of claims volume make up 70-80% of a typical companies claim dollars.  Ensuring that those claims are most effectively handled quickly is one of the best ways to manage loss and expense costs. And these same data analytics will also help to manage the high volume of matters that make up the remaining matters.

The authors point to several key elements to consider when implementing a CPM program as a way to improve the process with the claims professionals:

  1. Communication
  2. Making CPM Champions
  3. Buy-in from early doubters
  4. Closed claim reviews and comparative models

These issues are excellent suggestions no matter what type of change is being implemented. The bottom line is people need to be engaged when change is being implemented. When people perceive their jobs are being threatened they get defensive so it is important to help make the transition easier by being open. Regardless, times are changing and we as claims professionals need to adopt.

How Do You Think New Modeling Metrics Will Change Claims?

Everybody Wants to Make Improvements In Claims But No One Actually Makes It Happen

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It’s Like Selling World Peace. Everyone Is For It But No One Wants To Pay For It

There is so much that needs to be done in the world of claims. Operations need fixing, technology needs improving and a futures need to be defined.  For some reason however, we are all really good at talking about it and not so good about doing anything about it. The industry needs to take action.

We need leaders who will drive the initiatives needed to improve and modernize the claims industry. We are mired in an “it’s always been done that way” mentality and not doing anything about it.  I know the day-to-day is an ever growing series of issues. It is because we are forever being asked to do more with less that action is needed. Strategic planning is a necessary evil and a plan must be put into place to improve the whole or we will be destined to “always do it that way.”

Claims departments need to think creatively and “out-of-the-box” if we are going to attract new talent to the industry. This also means acting and not just talking about acting.

Take Action With These 3 Ideas

So how do you act?  check out these three suggestions for getting out from the wanting to improve to actually taking action:

  • Bring in a consultant for a fresh set of eyes… there is more there than you realize and having someone removed from the day-to-day operation will be like cleaning dirty windows. The clarity will allow you to see both good and bad and will give you the first steps to make improvement.
  • Buy one small application to help fix some aspect of the department. There are plenty of innovative technologies out there to help with everything from adjuster compliance (Xeneros) to claims auditing (the Audit Portal). Try one, they won’t cost too much but they will save you so much in time and expense.
  • Talk to your claims professionals.  Spend a day with a few of the people on the floor and listen to them. Unfortunately many continue to do tasks they know to add little value because they too fall into the “it’s always been that way” frame of mind. I promise you they know more and if given the chance will provide some fairly decent suggestions to improve the operation.  And guess what – this one won’t cost you anything.

How are you going to take action today?