During our first day together virtually, the AIRROC Summer Meeting attendees were treated to a presentation by Dan Link and Megan Nelson of third party administrator Gallagher Bassett (“GB”), moderated by Carolyn Fahey of AIRROC.
The panel engaged in a dynamic discussion about how claim severity, particularly in areas like auto bodily injury claims, general liability and mass torts, have continued to rise by double digits over the past several years as social inflation has led to run away trial verdicts. The various aspects of Workers’ Compensation claims are also getting more expensive and challenging. While discussing the causes for deterioration, the speakers also reviewed very innovative ways to utilize analytics to help manage high complexity and severity claims. Now, more than ever, it’s a good time to assess the complexity of a book’s mix and to understand what predictive analytics tools may be at your disposal to help support superior outcomes and decision making around things like: benchmarking outcomes, reserving, predicting which claims may become litigated, which claims are ripe for settlement and other key decision points.
As described in the session, GB’s award winning Severity Mix Adjusted Rating Technique (“SMART”) methodology was developed to be a more meaningful benchmark. Standard TPA benchmarks typically compare client claim data to an entire book-of-business or, at best, data from similar industries. While instructive, traditional benchmarks lack the refined approach of the SMART solution, which through a state-of-the-art claim complexity-rating algorithm, incorporates an extensive number of claim-level characteristics to gauge expected claim severity. Factors used to develop this proprietary benchmark include jurisdiction, job classifications, injuries claimed, litigation indicators, causation and fault, diagnosis codes, comorbidity indicators, narcotic usage, treatment quality (“TQI”) and much more as described by Dan and Megan.
GB’s SMART methodology powers their ability to assist legacy solution partners and carriers to evaluate portfolio performance, solution effectiveness and the impact on outcomes by enabling apples-to-apples comparisons of claims and results. Combined with Waypoint, another tool described during the session, which is essentially predictive analytics as to the appropriateness of reserves, the adequacy of the financials involved in LPTs, ADCs and other legacy transactions can be evaluated. Dan and Megan took our audience through the process which is utilized to find not only the low hanging fruit but to perform a full triage, aggressively pursue claim resolution, and “stop the bleeding” on some portfolios.
Also discussed was the Claims Strategy Dashboard where Dan and Megan demonstrated through various “widgets” the data being captured and utilized in driving real time opportunities for superior outcomes (which they call “ROSCO”). Some of the attorneys in the audience were also intrigued by the award winning Law Firm Management Performance scorecard (“GBLMP”), which was openly shared. There were many questions asked and answered during the panel discussion and in the “drop in” room afterwards.
Please check out a replay of this enlightening session in the AIRROC On Demand video library. You can also click here for an on demand playback of this presentation on the GB platform and feel free to sign up for GB’s newsletter at https://insurers.gallagherbassett.com
