With the insurance loss control landscape inevitably embracing newer technology, data mining for the purposes of business intelligence is becoming more important than ever. As the role of a loss control consultant continues to shift from inspector to consultant, the ability to reflect on data and draw consultative conclusions becomes paramount.
Traditionally, the loss control team was responsible for collecting a significant amount of data from the insureds, but the tools used offered limited ability to actually mine this data to identify exceptions and trends. Whether the issue was that final reports were in the form of PDF (or other read-only formats) or that several applications were used simultaneously to help facilitate the team’s work (i.e. Word, Excel, paper, various workflow systems, etc.) the fundamental problem existed that the data was not readily available, thus making it nearly impossible to get an accurate view of what all this data was trying to say.
Traditional loss control reporting objectives revolved primarily around team management and task management, which obviously have operational benefits, but new technologies allow loss control leaders to dig deeper into the data to unlock its hidden value.
5 progressive uses of data in loss control
- Account Benchmarking
By providing your consultants with the ability to benchmark the metrics of one account against other similar accounts (or against the overall book of business average), they are able to more effectively communicate with insureds regarding risk improvement. Showing actual data comparing them to their peers in the industry is far more powerful than simple conjecture. In order to make this type of tool accessible for consultants, it is important to incorporate easy-to-use data visualization tools which allow these comparisons to be presented to the account in a simple, easily understood manner, ideally using graphical data representations. Another great aspect of benchmarking is that it allows insureds to see their risk improvement over time as they implement the consultant’s recommendations, resulting in a long term win-win outcome for the insurer and the account.
- Resource Optimization
If claims and loss control data can be leveraged together in the organization, the effect can be enormous. The old “lagging indicators” approach of waiting until an account has specific claims experience before implementing risk improvement measures does not proactively address the inevitable issues that a specific account likely will experience based on their risk profile. The issue for most loss control teams has been, however, that the specific risk profile data was locked away in documents without any ability to extract it and use it for targeting loss control efforts.
By having the ability to correlate claims experience with a detailed risk profile (driven by loss control data), insurers can focus risk improvement efforts on the issues that that the account is most likely to encounter, as opposed to analyzing a broad set of risk management topics, many of which will likely never result in any material claims mitigation for that specific account. In a world of constant resource scarcity, this targeted approach can pay major dividends by focusing efforts where they will provide the greatest ROI.
- Identification and Isolation of Risk Demographics
In addition to resource optimization, having the ability to access the underlying data which describes each account from a detailed risk perspective opens up new doors from a customer relationship management perspective. Combine this with the fact that most carriers are looking for ways to engage their end customer as a differentiation tool, and your loss control data has just become a source of competitive advantage.
Imagine being able to zero in on all of your construction accounts who utilize a certain type of equipment and do not have a formalized safety training program and at the click of a button, invite them to a targeted webinar on this risk management topic which is relevant to them. Pretty powerful stuff. Providing this type of relevant information to your accounts not only serves to bolster risk improvement, it also engages the account and underpins the value you bring the to table as a risk management partner.
- Data Manipulation for Underwriting Purposes
Ask a group of underwriters how they go about reviewing a loss control report and you will get many answers. Some will read it front-to-back while others will zero in on key items which they believe affect their underwriting decisions. Most will agree, however, that the traditional ‘report’ format is not the most efficient way to consume the loss control data captured by the consultant.
By allowing underwriters the freedom to easily manipulate the data using a reporting engine on top of the loss control database, the data becomes exponentially more powerful and far more useful. This is not to say there is no further use for a traditional report format to “put in the file”, but what underwriters are looking for from the consultant are insights which affect their decisions, and the stack of reports sitting on their desk or in their email inbox seems like a daunting task rather than a valuable tool.
- Quantification of Organizational Impact
One of the most effective weapons in the ongoing battle against the view of loss control as simply a cost center is the ability to quantify your team’s impact on the bottom line. At the executive level, being able to illustrate a substantial increase in account risk quality, recommendation mitigation results and the impact of loss control activities on overall account retention is seen as the ‘holy grail’ for most loss control executives.
Prior to today’s era of data-centric loss control management systems, proving your value in the organization was not only very difficult, it was often unsupported by concrete results and metrics. Just as underwriting, claims and finance teams have been easily able to demonstrate quantifiable results for many years, loss control is now able to leverage data to underscore the importance of this function in the broader organizational scope.
In summary, centralizing and making your loss control data accessible can truly solidify the value of the risk management activities being delivered by your team. Beyond that, putting these progressive uses of data into action will lead to further investment in the discipline, as the value becomes clear-cut to the other stakeholders in the organization.
