Know the Plaintiff Side Through Data, Drive Down Litigation Costs

One of the most significant challenges facing property and casualty (P&C) insurers is the sheer volume of unstructured data from various sources needed to make informed decisions. The claims process is complex, often involving multiple parties, varying legal issues and associated costs. One vital tool that is poised to help in decision-making across the claim lifecycle is data analysis.

Data that is curated and analyzed in a timely and relevant way can help reduce costs, improve operational excellence and build customer trust and loyalty. When used wisely, it can also be a powerful tool for insurers looking to manage litigation risks and achieve more efficient, effective, quality claim outcomes.

Data Hygiene

The insurance industry has no shortage of data available. Sourced internally and externally for informed decision-making, it has created a rising challenge of data hygiene that needs to be addressed by insurers. Two general rules always apply:

• The data being analyzed must be accurate, reliable and up to date. This requires insurers to have robust data governance processes to ensure that data is clean, standardized and accessible. Additionally, for the data to remain relevant and accurate over time, it must be regularly monitored and validated.
• Insurers must be able to interpret and act on the data being analyzed to make informed decisions. A combination of technical expertise, business acumen, and the right decision tools and processes must be in place to support this process.

Using Data to Enhance Operational Excellence

For claims to be handled efficiently, accurately and with a focus on quality outcomes, they must be met with operational excellence. This requires insurers to have the right expertise in place to manage claims from start to finish, including technical expertise in data science, analytics and decisioning. Insurers should also hold some knowledge in the legal and regulatory fields related to claims.

Increasing costs associated with claim losses have driven insurers to reduce cycle times, improve staff capacity, increase profitability and increase customer satisfaction. The industry should lean on advanced workflow automation tools and real-time monitoring capabilities informed by data to meet these expectations. To guarantee claims processes and procedures are consistent with fair claim practices, ongoing training and timely file audits must be completed.

Data in Litigation

Litigation can be a significant challenge for P&C insurers within the claims process, potentially resulting in high claims costs and unexpected verdicts. In recent years, the reported percentage of insurance claims in litigation rose by 47%, while the percentage of these cases resulting in trial fell. For insurers, this is a call to action to enable data capabilities that optimize the accuracy and reliability of data and the timeliness of claim settlement.

When a lawsuit arises, the claim professional is expected to identify and understand coverage and defense issues, have familiarity with plaintiff attorneys, facilitate the selection and assignment of appropriate defense counsel based on the claim loss type, understand the legal issues, and drive toward a quality outcome. However, Verisk Analytics says, “No matter the line of business—when a claim involves litigation, it typically drives up costs, extends cycle times, and ties up staff resources.” The reality today, for many insurers, is the absence of a data-driven process to evaluate plaintiff counsel and determine the right defense attorney for the best claim outcome.

This is especially true as insurers face an increasing talent gap. Experienced claims professionals are retiring at higher rates, and attracting new entrants to fill vacancies is getting harder. As a result, insurers are faced with assigning less experienced claims professionals to more complex claims. Novice claims professionals are asked to make significant decisions with limited information and expertise, raising risk and cost. Litigation data captured today is primarily unstructured, making data modeling and decisioning a challenge. The lack of centralized, standard end-to-end data from first notice of loss and third-party sources presents an opportunity.

Imagine enriched, analyzed and modeled data that can predict potential outcomes and attorney behaviors for both counsels from strategy to settlement. As data is received in a claim file, adjusters can be confident its results will be used to provide a more standard approach to claim handling and resolution. Such data should include plaintiff attorney evaluations, which might encompass prior settlements, demands, negotiation tendencies, jury verdict research and mitigating issues brought to light, all used to resolve a claim more effectively. This information could inform adjusters for decisioning, case assignment, defense strategies and appropriate settlement opportunities.

Leveraging Data for Quality Claim Outcomes

“The moment of truth” is often used to describe the point in the claims process when insurers are held to resolve a reported loss and connect with their policyholder. To build customer trust, loyalty and increase customer satisfaction, insurers must provide transparency and clear communication throughout the claims process. In addition to managing costs and mitigating risks effectively, insurers must balance delivering fair and timely results to policyholders delicately. By focusing on combining organized, actionable data with defined impacts on operational efficiency, insurers can optimize the quality of claim outcomes.

Steven Tesler is principal and Darin Campana is senior manager of insurance consulting at EPAM Systems, Inc., a publicly traded software development firm.

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Topics Lawsuits Trends