Analytics: Accident Fund Builds Through Teamwork

Lansing, Mich.-based Accident Fund's (about $3 billion in assets) newly appointed chief claims officer, Patrick Walsh, is tasked with consolidating the capabilities of the workers' compensation insurer's individual operating units while preserving their unique qualities, he reports. In addition to consolidating claims platforms across Accident Fund's operating companies, Walsh sees analytics as a key component of a strategy that puts the right tools in the hands of employees with the goal of achieving better results for customers.

"The claim experience is the closest thing to a tangible product that we have, but the industry has made the mistake of thinking of claims as a cost center rather than a differentiator," Walsh says. "Many carriers focus on loss expense, which represents between 7 and 14 cents on the dollar. Thoughtful investment in claims handling and service can improve the total financial picture of claims, which covers between 60 and 70 cents on the dollar."

Accident Fund has formed a kind of analytics faculty of actuarial and data-focused professionals who have experience in workers' compensation and healthcare to build propietary analytics capabilities, according to Walsh. Within that body, one team is focused on predictive modeling for claims and other areas, including underwriting. "A second team is focused on things that we know to be true, and taking advantage of that data to drive decisions," Walsh adds.

Walsh says his analytics team is focusing on the 15 percent of claims that make up 75 percent of total spend. Within that segment are subsets of claims that are particularly expensive and therefore important to target for special processing.

"We want to get very creative in handling those subsets to minimize exposure and get people back to work as soon as possible and to a higher quality of life," Walsh comments. "Analytics will be a major part of identifying what will be the more complex and severe claims that we formerly had to identify through experience alone."

Anthony O'Donnell has covered technology in the insurance industry since 2000, when he joined the editorial staff of Insurance & Technology. As an editor and reporter for I&T and the InformationWeek Financial Services of TechWeb he has written on all areas of information ... View Full Bio