Claim Analytics has been conducting benchmarking studies since 2009. This started with our disability customers, who wanted to know how their claims experience compared to other disability carriers. While this information was available, it did not adjust for the differences in the mix of business written by each of the carriers and therefore could be very misleading. To address this problem, Claim Analytics developed a benchmarking methodology using predictive modeling to normalize for differences in mix of business between carriers and therefore produce an apples to apples comparison of how carriers were managing their book of claims.
We have successfully carried out several studies in the US and Canada; the approach we originally developed for disability business can be applied in many other areas
Disability Management Benchmarking
Traditional approaches to comparing disability recovery or termination rates are distorted by differences in mix of business such as elimination period, region, diagnoses, claimant age and benefit amount. Our approach to benchmarking claims experience provided a great leap forward by providing an apples-to-apples comparison.
Participant firms typically represent at least 70% of the disability insurance premiums written in their market. Over the years our benchmarking studies have found:
Significant variations in recovery rates between companies
Little variation in some diagnostic groupings, such as cancer claims
High variation in other diagnostic groupings, such as mental disorders, musculoskeletal, injuries, nervous system and circulatory claims
Our studies show disability carriers how they are performing on key aspects of disability claim management. Forward-looking carriers use this information to leverage changes in their claims departments to improve performance and outcomes.
Long Term Care
Just like disability claims, comparing LTC providers claim experience can be misleading due to differences in the mix of business. The approach we developed for disability benchmarking applied to LTC claim experience would normalize for differences in the claim mix and thereby make a more meaningful comparison between companies.
Critical Illness practices vary significantly between providers. Benchmarking using predictive analytics can give a meaningful comparison.
Term Renewal Lapse
Companies are becoming increasingly alarmed by the lapse rates they are experiencing on 10 Year Term renewals. Furthermore, products issued today have different features than the ones renewing now, so their experience will be different. Using our approach to normalizing experience we can predict the experience on business issued today and identify factors to reduce lapses.
2015 US LTD Intercompany Experience sponsored by Munich Re; this study is fully enrolled and in progress.