In the workers’ compensation claims arena, 0.4 percent of the claims account for 40 percent of all claims costs. These mega claims are at a 12-year high and add up to $2 billion each year in paid losses in the U.S. PropertyCasualty360 offered insurers insight in how artificial intelligence and machine learning can flatten this curve in a 40-minute webinar on March 31, Manage the Uptick in Mega Claims Efficiently.

Two analysts from consulting firms served as panelists. Seth Rachlin, Ph.D., Capgemini, and Pramod Akkarachittor, CLARA Analytics, addressed how data can be used to enhance the efficiencies of human claims adjusters, not to replace them. The data used in these systems is far greater than any single insurer, especially the small to midsize insurers, can find and apply in-house. Carriers using outside data analytics close the data gaps that exist when using only their own data, said Rachlin. The large volume of data becomes more reliable.

“Mega claims are here, and they are evolving,” said Rachlin. Insurers cannot handle them the way they have always been handled, solely by human adjusters, no matter how experienced, he said. “Artificial intelligence and machine learning are the appropriate model, leveraged with human adjusters,” he explained.

Rachlin traced the rise in mega claims to the economic rebound beginning in 2013, when construction activity rose. While construction claims are less than 20 percent of overall claims volume in most states, said Rachlin, this sector is the major contributor to mega claims across the country.

Rachlin pointed out that construction workers tend to be young, generally under 40. A lifetime injury for a young person that affects his ability to earn is costly to the workers’ comp insurer. For claims in excess of $10 million, said Rachlin, nearly 75 percent of the claimants were under 40 at the date of the loss.

Another driver of the mega claims, said Rachlin, is the improved technology in the health care sector. This improves health care options, he said, but it has dramatically increased health care costs. Health care inflation exceeds general inflation, said Rachlin.

By using analytical models, said Rachlin, some insurers are identifying claims with high cost potential early in the process. If claims can be triaged intelligently, said Rachlin, then human adjusters can spend 95 percent of their time and attention on the five percent of claims that need their attention. Simple claims can be open and closed quickly, and adjusters can help the workers who have been most severely impacted by a tragic event.

Akkarachittor said that the CLARA Analytics product looks at 30 to 40 data points in the triage stage to provide early assessment of the potential of the claim. Artificial intelligence applied early, said Akkarachittor, can be predictive. Data processed includes the nature of the accident and the injury, the legal jurisdiction of the workplace accident, the injured worker’s other health conditions, if any, and more. AI will track the data points daily and alert an adjuster to early signs of an escalating claim. The data alerts adjusters to take prompt action to reduce complexity, lower cost and enable workers to return to work faster. The data also enables risk managers to identify trends, such as clients, providers and attorneys that are leading to higher than expected claims costs.

Once the injured worker is in treatment, AI can monitor the worker’s care and make sure the injured worker is being provided the best quality of care. CLARA Analytics scores health care providers in a way that provides insights to adjusters who can, in turn, appropriately advise the injured worker to seek a second opinion to better understand the available options. The data set offered by CLARA contains an expanding set of 200,000 providers across the U.S., all with relevant specialties, so adjusters can access details on a wide range of physicians.

These data companies also analyze the legal environment, including profiles of attorneys. AI can help avoid litigation, but if the injured worker hires an attorney, AI can aid the carriers’ ability to defend the case. By acquiring insights on the plaintiff attorneys, carriers can optimize their defense team, said Akkarachittor.

Another plus of the analytics, said Rachlin, is that carriers can use the data to guide loss prevention strategies. “Now is the time to double down on workplace safety,” said Rachlin. Using the analytics to identify the attributes of safe working places, safer operations and practices can make a huge difference in avoiding accidents in the first place.

Capgemini is a French multinational corporation founded in 1967 that provides consulting, technology, professional and outsourcing services. It is headquartered in Paris, France, and has more than 270,000 employees in over 50 countries. CLARA Analytics was founded in 2016, with the specific mission of improving claims outcomes in commercial insurance through artificial intelligence. CLARA Analytics is headquartered in Santa Clara, California.

The mega claims discussion sponsored by PropertyCasualty360 was recorded and is available for replay.