Understanding actionable insurance claims litigation analytics
Insurance executives are demanding litigation managers to reduce legal expenses, increase business intelligence, and improve case outcomes. The way to achieve these objectives is through actionable insurance claims litigation analytics.
Insurers face many obstacles when implementing software. You may already be familiar with these obstacles if you’ve selected e-billing or legal fee auditing software in the past.
These same obstacles are present when you are trying to develop insurance claims litigation analytics. To successfully navigate the path to insurance claims analytics, you must avoid the common pitfalls.
In this article, we address the obstacles to developing insurance claims litigation analytics. Next, we provide an overview of the foundation of insurance claims litigation analytics, and what impactful questions analytics can answer. Armed with this knowledge, you can choose the right partner to transform your department with claims litigation analytics.
Obstacles between insurers and actionable insurance claims litigation analytics
If you have been tasked with introducing analytics in your legal department, it is equally important to know what to avoid as it is to understand how analytics work.
The first roadblock is the array of software and service providers that are “false positives.” In other words, these providers claim to produce claims litigation analytics, when in actuality, these providers take an off-the-shelf, one-size-fits-all approach.
Inability to capture and maintain data
Case Management + Analytics ≠ useful litigation analytics
Because what you think is “case management” is not what the majority of “case management” software providers offer.
For most insurers, determining how to get litigation data is the most important decision insurers can make. Complete, structured, and valuable data is not going to magically appear. It comes from outside law firms or from litigation adjusters. But thinly-staffed litigation departments cannot afford to pay their attorneys millions of dollars per year to type data into emails and Word documents, and then later ask litigation adjusters to type the very same information into software.
Law firm personnel outnumber internal insurer personnel nearly 25 to 1 when handling litigation files. As a result, insurers need to leverage their law firms to capture and maintain its data. Leading departments that understand this know that the data must be captured once: when the attorney types it to the insurer.
If an insurer cannot overcome the obstacles of incomplete data and insufficient workflows to capture data, its analytics initiative will harm, not help, the company. Actions taken on incomplete data are risky.
For example, insurers without collaboration workflows built into the insurer-attorney collaboration process will soon find that their data is incomplete, unreliable, and unstructured. Even worse, the insurer has to burden the litigation adjusters with another duplicative clerical task that gets in the way of settling cases.
Likewise, an account representative may suggest that an insurer use cost and duration analytics to choose lawyers. This incomplete data could lead insurers to hire lawyers who pay far too much in settlements, resulting in a poorer financial situation than before.
Incomplete and stale data means insurers cannot take action on the analytics. Managers must avoid these common pitfalls in the claims litigation analytics procurement process.
Insurance claims litigation analytics basics
In this section, we will explore the data foundation for insurance claims litigation analytics and discuss how these analytics can help insurers make impactful decisions.
Insurance Claims Litigation Data Foundation
The foundation to insurance claims litigation data includes:
- Claim Amounts
- Case Amounts
- Property Details
- Case Types
- Key Dates
- Insured Representatives
- Estimated Losses from Both Sides
- Offers and Counteroffers
- Indemnity Settlements
- Expense Amounts
- Resolution Paths
- Case Concerns
- Motion Outcomes
Insurance Claims Litigation Analytics Foundation
When insurers have the data to form the basis for analytics, the litigation department produces analytics that highlight the key levers in litigation:
- Trends, Emerging Issues and Developments for Underwriting and Actuaries
- Averages and Medians
- Predicted Development
Plaintiffs and defense attorneys:
- Closure Percentages
- Averages and Medians
- Predicted Development
Million-Dollar Questions Your Analytics Provider Should Help You Answer
How do you know if you have the right insurance claims litigation data and analytics foundation? With the analytics, you should be able to answer the following million-dollar questions:
- How do I determine my strategy in a case against a particular plaintiffs’ attorney?
- Which defense attorneys are the top performers, not just the cheapest?
- Which cases should I be paying attention to and when?
- What are the events that most often trigger settlement, and how can I use that information to achieve better outcomes?
- What should underwriting and analytics know to ensure these trends do not continue?
For most insurers, answers to these questions can result in million-dollar improvements to the litigation balance sheet. For example:
- Assigning a case to an attorney who obtains 30% better settlements is better than hiring an attorney that saves you $500 per case.
- Knowing that a plaintiffs’ attorney has historically settled for 70% of what she demands 417 days after filing suit helps insurers avoid paying $20,000 in legal defense costs to reach the same conclusion.
- Segmenting categories of cases and obtaining routine, automated reports on those cases only helps litigation managers zero in on cases they can make a difference in, instead of simply paper pushing the next email.
- Translating data into insurance terms – underwriting and actuarial data –empowers the engines in the business to drive it in the right direction.
If the executive team has tasked you to bring analytics to your litigation department, you can transform the department, but only if you find the providers that deliver complete, actionable data that is created within the day-to-day workflows of your department. You must also ensure the provider has a foundation for insurance claims litigation analytics, including all the key insurance claims-specific data necessary to act: litigation demographics, people, financials, and strategies. Once you find this advanced insurance case management software provider, ask whether the provider has the analytics to answer the million-dollar litigation questions.
If you have found this advanced insurance case management software provider, you have solved your company’s need for claims litigation analytics. You can begin to transform the claims litigation department to achieve better outcomes at less expense.