Innovations in Demand Management Solutions for Insurance

 If you are in the claims or claims management business, chances are that you have a more than casual acquaintance with time limit demands (TLDs). Insurance providers receive thousands of documents every day, including demand letters from claimants’ attorneys, and time is not the insurer’s friend when it comes to TLDs. Settlement communications, while a powerful litigation tool for attorneys of an insured, are notoriously hard to handle for the insurer and can lead to recovery in excess of the policy limit in certain cases.

Any action leading to strengthening of the claims validation and vetting process stands an insurer in good stead. In this article, we examine the challenges, the requirements of a typical claims department and demand management solutions for insurance companies in the context of TLDs.

Challenges

Not only is the sheer volume of attorney demand letters a challenge for insurance providers, the complexity of the letters poses an additional dimension of difficulty. The demands can be buried in thickets of complex legal verbiage, leading to ambiguity on key information. In addition, the manual review and tracking of milestones for numerous demands is prone to greater errors.

A TLD that is not identified and managed in time puts an insurer at risk for bad faith exposure and potential litigation, possibly with higher settlement costs. Investing in a demand management solution that can significantly reduce the margin of error in identifying, tracking and managing offers a crucial extra level of protection for insurers.

Serving the Needs of the Claims Team

Adjustors handle multiple claims every day, each associated with multiple documents in turn. Responsible for identifying demand letters and evaluation of the related documents, their most critical responsibility is to understand the specifics and respond to the letters in the stipulated time. Most adjustors manually identify, assess and track demand letters — a process that is both error-ridden and time consuming.

A demand management solution that has the capability to identify demand letters from other correspondence, cull the key information from them and track them through their lifecycle is the need of the hour for adjustors. The volume of TLDs also creates the need for a concise dashboard that can reflect the stage of each demand, has tracking and notification capabilities and has built-in assistance features can be a powerful aid for adjustors. Coupled with modern tools for rapidly processing thousands of documents, it would enable adjustors to gain early awareness of demand letters and increase efficiencies in identifying high-risk demands. It’d also help reduce human error and eliminate losses due to misinterpretation of attorney demand letter response dates.

Claims managers who lead a team of adjustors perform the critical function of ensuring that the TLDs received by the team are processed accurately and on time. A demand management solution that can help claims managers track the status of TLDs under process, raise flags for unanswered demand letters, notify imminent milestones and help configure the team as per need can support managers in increasing the effectivity of the team.

The effectiveness of the claims division lies with senior management who bear the onus for reducing losses due to missed demands. While they need an overall view of the claims, their specific responsibilities require support for their intervention at critical stages, handling exceptions and the ability to reassign personnel to create the most effective teams. They also require their demand management solution to enable them to help track the total demands and exposure values as well as track negotiation offers.

Cogitate Demand Management Solutions for Insurance Carriers

Cogitate Demand Management, a part of the Cogitate Intelligent Claims suite for insurance companies, is a powerful tool for attorney demand letter identification and management. One of its kind, it offers protection against bad faith exposures, loss in claims and mitigates the risk of a missed demand letter that may lead to significant settlement costs. Cogitate Demand Management is capable of parsing complex legal verbiage, identifying demand letters and tracking key dates and offers made in negotiations. A special feature is the use of OCR, text mining and ML to automate identification and management of demand letters. The solution offers complete life cycle management with configurable tracking and notifications, flexible team management features and easy integration with many existing Document Repository Systems and Claims Management Systems. Talk to us today to learn more about how demand management solutions our for insurance carriers and MGAs can help them achieve greater control over attorney demand claims exposure and surpass the needs of your claims division.

How Insurers Are Using Technology to Deal with Insurance Claims Fraud

 This post details the growing menace of insurance claims fraud. It is a problem that nearly all insurers are battling, but with limited success. The fact that fraudsters are always a step ahead by misusing technology to achieve their nefarious deeds makes it even more difficult to manage the problem. Technology is the only way of mitigating the instances of claims fraud and empowering insurers to deliver their services more effectively.

Insurance claims fraud is an area of serious concern for insurance providers, as the instances of such scams are proliferating globally. Scammers indulge in inflating claims by manipulating facts and making a pile of cash illegally. It forces insurance companies to invest heavily in system upgrades, technology, and manpower to proactively detect such fraud attempts and mitigate potential losses.

The Challenges:

Insurance providers have been relying primarily on the judgment of agents and industry experts to detect instances of frauds. While this was a reliable method in the past as there were limited number of cases, in the modern world it is impossible to keep a track on fraud using human resources.

• It is virtually impossible to scrutinize all claims manually.

• Fraudsters are using newer and more sophisticated ways of perpetrating such crimes.

• This has entailed the need to use technology to deal with this growing and serious crime.

The rise of technology such as data analytics has created a world of endless potential for organizations operating in the insurance sector. While cost concerns and regulations have been the reasons for slow adoption of data analytics by the insurance sector in the past, all that is rapidly changing because of the intense pressure on the industry to cut down the colossal losses caused by claims fraud.

There is a lot of regulatory importance placed on protection of personal information, with new layers of security being added regularly. This has made it extremely tough for insurance companies to access data from various sources for fraud predictions. Data analytics has proved to be a game-changer for the industry and is helping insurers manage claims fraud instances better.

Fraud Analytics Software

Insurers are incorporating insurance fraud analytics software into their business processes to detect fraudulent practices and detect such incidents early and proactively.

Fraud analytics software systems can reduce claims fraud by gathering data from various sources and collating it into meaningful and valuable information. Predictive capabilities of the software can help companies apply the process to a large area of business operations and improve fraud detection significantly. The software can be used for:

• Identifying optimal risk level

• Gaining qualitative insights from data

• Mitigate fraud risk at insurer’s end

• Eliminating fraud risk at the agent’s end

• Moving from manual to automated underwriting

• Establishing accepted limits of risks

• Automating procedures to identify risk assessment for determining various factors such as coverage, profitability and others

Understanding Legacy Systems

One of the biggest challenges of adopting analytics software is the need to upgrade systems to the latest versions. With technology evolving rapidly and continuously, this might entail a fairly substantial investment. Also, there are concerns around use of a third-party service or software because of privacy protection issues. Insurance companies might not have absolute control over data which can result in significant liability.

Insurance Fraud Detection Solutions:

Advanced claims fraud detection solutions are driven by technology. It works in the following ways:

Detection of Anomalies:

Multiple metrics are created to compare the behavior of various entities. The system makes use of statistical analysis to detect any anomalies that deviate from the normal behavior patterns of agents and customers.

Analysis of Claim Notes

Analytics can help in extracting information by going beyond structured data. In simple terms, it means that it can pull data about circumstances of a specific incident, the parties involved, the damage caused, treatment costs and other related data vital for claims settlement.

Investigation of Anomalies:

Agents and customers pointed out as anomalous on more than one count are singled out and detailed analysis carried out to find out the reasons for the anomalies. Business rules can be set up to prevent misuse and future frauds.

Conclusion

Insurance frauds are generally carried out in a very organized manner across the globe. In the modern world, it will be difficult to detect them without using sophisticated analysis methods. Insurers must leverage newer technologies to prevent, detect, and filter frauds. This will help improve claim adjustment expenses and improve the efficiency and performance of the industry.