How Claims Litigation Information Can Enrich Insurance Underwriting Data
Tim Berners-Lee, the computer scientist best known as the inventor of the World Wide Web, had a profound take on data. “Data is a precious thing and will last longer than the systems themselves,” he once said. However, as many insurers have learned, truly valuable data (structured and highly specific) hasn’t always been easy to come by. And when one functional area does have valuable data, it’s not always shared internally with those who could benefit from additional insights.
Underwriting is a perfect example of an area in which an influx of new data points can give better insights, insulate the insurer’s bottom line, and foster collaboration. Thanks to the structured data curated in claims litigation management software, claims can now help close the data loop by providing data to insurance underwriting and actuarial teams.
How Insurance Underwriting and Actuarial Teams Use Data to Rate Risk
Actuaries and underwriters work hand in hand to assess risk and issue property policies for homes or businesses. The actuarial team uses math, statistics, and historical data to estimate the financial impact of uncertainty. The underwriting team assesses the individual risk, determines whether they will insure the properties, and applies the appropriate rate set by the actuaries.
To do this and to arrive at the policy’s premium, both underwriters and actuaries review an array of data elements, such as the age of the property, its location, type of plumbing fixtures, age and condition of the roof, and other building materials. The more data these teams have access to, the more accurately they can reflect the risks of the property and price accordingly.
How Claims Litigation Data Can Be Helpful for Underwriters and Actuaries
The success of both actuaries and underwriters depends heavily on the quality and precision of the available data. If details about the historical claims experience are lacking in any way, these teams must make broader assumptions, lending uncertainty to both the pricing and underwriting models.
Many claims organizations acknowledge that litigated claims are significantly more expensive than non-litigated ones. Yet, many struggle to provide helpful litigation information to their actuarial and underwriting colleagues – information that enables more precise pricing and risk valuation.
Imagine if the claims team could advise the organization:
- The percentage of files which become litigated in any specific (and narrow) geographical area.
- The types of claims that are more likely to be litigated, with associated percentages.
- The specific costs associated with those litigated files and how they differ by type and venue.
- Real-time data on developing new litigation case types and their associated costs.
This kind of data on litigated files can be shared to help round out data sets. Given the significant losses that litigated claims bring, claims teams with the right kind of litigation management software have an interesting collection of data points that could be very helpful for both actuarial and underwriting teams.
Insurance organizations that follow the law of large numbers can accurately predict claim outcomes much better. By collaborating and providing these types of data points, claims organizations can help the insurance carrier better understand the totality of risk factors and preemptively prepare for the associated costs instead of after the fact.
Closing the Data Loop: How Claims Litigation Teams Help Carriers Be More Proactive
It’s important to note that this loop can only be closed when claims litigation data is available structured and reportable. Claims litigation management system solutions like CaseGlide structure and track this data, facilitating easily accessible reports which provide previously inaccessible levels of detail about the organization’s litigation experience.
CaseGlide is a leading claims litigation management software solution that claims organizations can use to harness the power of structured data. Our platform drives efficiency, delivers insight, and reduces costs for litigated claims- while also serving as an asset to insurance underwriting teams. Contact us if you would like to learn more.