CA2429767A1 - Methods for improving insurance claim accuracy and related devices, systems, and methods - Google Patents
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Abstract
The present invention relates to the use of computerized information collection, storage, retrieval, computation and analysis techniques as a part of a business process to assist in the improvement of the practices and procedures for estimating the value of insurance claims and for determining underwriting criteria for such insurance.
The present invention relates specifically to methods for the improvement of individual property claim estimates, as well as estimation procedures and their counterpart underwriting processes. The present invention also relates to systems and devices useful for implementing the methods disclosed herein.
The present invention relates specifically to methods for the improvement of individual property claim estimates, as well as estimation procedures and their counterpart underwriting processes. The present invention also relates to systems and devices useful for implementing the methods disclosed herein.
Description
METHODS FOR IMPROVING INSURANCE CLAIM ACCURACY AND RELATED
DEVICES, SYSTEMS, AND METHODS
FIELD OF THE INVENTION
The present invention relates to the use of computerized information collection, storage, retrieval, computation and analysis techniques as a part of a business process to assist in the improvement of the practices and procedures for estimating the value of insurance claims and for determining underwriting criteria for such insurance.
The present invention relates specifically to methods for the improvement of individual property claim estimates, as well as estimation procedures and their counterpart underwriting processes. The present invention also relates to systems and devices useful for implementing the methods disclosed herein.
BACKGROUND
The success of an insurer is dependent on its ability to make sound decisions in underwriting risks and its ability to properly estimate and settle claims when losses occur, consistent with its contractual obligations to its insureds. Because claims adjusters must make decisions based on their individual collection of relevant claims data and their individual experiences, all but the largest and most complex claims adjustment decisions are made by adjusters in the field. Depending on the experience level of the adjuster, the adjuster may make settlement recommendations in individual cases with little or no supervision or approval from a centralized source.
Historically, adjusters have been given great latitude in making decisions in the field and their work has been reviewed primarily on an anecdotal basis. While adjusters have been provided with compendia of information relating to relevant costs, as well as a range of computational methods and devices for assisting in working up claims estimates, they have limited access to useful aggregate data on previously settled claims. Their individual practices and procedures typically have not been reviewed rigorously to determine how their individual practices and procedures compare, favorably or unfavorably, to norms determined for groups of claims similar to those given to them to adjust. They have not been provided typically with suggestions as to improvements in the manner in which they make determinations.
The advent of computerized database techniques, remote computing, and data communications methods now provide tools that can be useful as components of new methods, such as the present invention, to allow the adjuster and his or her supervisors to use historical and current claims data actively in both the adjustment of individual claims and in the determination of ways for improving adjustment methodologies going forward.
In addition, the ability to focus on data collected in claims adjustment provides potential benefits for significant improvement in the process of underwriting insurance policies. Specifically, the process of predicting claims severity, determining adjustment costs, and determining loss payouts can be improved and thus improve the support of underwriting decisions, including without limitation decisions as to whether to accept risks and how to set the insurance premiums that warrant the acceptance of such risks.
What are needed are specific techniques to enable field adjusters, their supervisors, underwriters and other managers to use quantitative experience to best estimate claims and risks in individual matters and to derive highly customized practices and procedures to improve the aggregate outcomes of both claims processing and undenvriting activities.
SUMMARY OF THE INVENTION
The present invention includes and provides a method for improving the accuracy of a property insurance claim estimate, comprising: inputting insurance claim data into a software program; and, analyzing said claim data for excess expenses, wherein said analyzing is performed using two or more claim components selected from the group consisting of materials quality, multiple minimum charges, materials overlap, use of operations, application of tax, fulfillment analysis, depreciation applied, regional analysis, deductions for windows and doors, overhead and profit, claim cycle time, waste factors, unit of measure analysis, debris removal, peril analysis, data outlier analysis, client specification best practices, assembly correlation and reciprocal item correlation and data integrity scorecard.
The present invention includes and provides a method for reviewing property insurance claims data, comprising: inputting insurance claims data into a software program; and, analyzing said claims data for excess expenses, wherein said analyzing is performed using two or more claim components selected from the group consisting of materials quality, multiple minimum charges, materials overlap, use of operations, application of tax, fulfillment analysis, depreciation applied, regional analysis, deductions for windows and doors, overhead and profit, claim cycle time, waste factors, unit of measure analysis, debris removal, peril analysis, data outlier analysis, client specification best practices, assembly correlation, reciprocal item correlation, and data integrity scorecard.
The present invention includes and provides a method for reducing property claims settlement costs, comprising: inputting insurance claim data into a computer program; and, analyzing said claims data for accuracy, wherein said analyzing is performed using t<vo or more claim components selected from the group consisting of materials quality, multiple minimum charges, materials overlap, use of operations., application of tat, fulfillment analysis, depreciation applied, regional analysis, deductions for windows and doors, overhead and profit, claim cycle time, waste factors, unit of measure analysis, debris removal, peril analysis, data outlier analysis, client specification best practices, assembly correlation, reciprocal item correlation, and data integrity scorecard.
The present invention includes and provides a program storage device readable by a machine, tangibly embodying a program of instructions executable by a machine to perform method steps to reducing property claim settlement costs comprising:
inputting insurance claim data into a computer program; and, analyzing said claim data for accuracy, wherein said analyzing is performed using two or more claim components selected from the group consisting of materials quality, multiple minimum charges, materials overlap, use of operations, application of tax, fulfillment analysis, depreciation applied, regional analysis, deductions for windows and doors, overhead and profit, claim cycle time, waste factors, unit of measure analysis, debris removal, peril analysis, data outlier analysis, client specification best practices, assembly correlation, reciprocal item 1 S correlation, and data integrity scorecard.
DESCRIPTION OF THE IIWENTION
The present invention relates generally to methods for improving the processing of insurance claims through the systematic collection of data and the analysis of the:
effects of selected components of claims data on individual claims or groups of claims.
The present invention relates more specifically to methods for the improvement of those processes as they apply to property claim estimates and/or property insurance underwriting determinations.
The present invention includes and provides methods that rnay be applied to the foregoing processes as they may be applied to any type of insurance claim for which certain types of Claims Component information is applicable. In a preferred embodiment, the present invention is used with respect to the analysis of technique, for processing property insurance claims and, more specifically, real property insurance claims, including but not limited to residential and commercial real property, such as apartments, houses, condominiums, office buildings, mobile homes, and industrial buildings. The present invention can also be used with respect to other forms of insurance known in the art, including personal property (unscheduled personal property and business property, for example), and insurance that covers the cost of temporary living space and additional living expenses in the event of a significant loss to real property.
The present invention includes and provides a method fox identifying Claims Components (as described below) that affect the accuracy of the process of estimating insurance claims, by collecting Claims Data from a selected aggregate of historical claims for which Claims Data has been recorded, computing Claims Components for each such claim, and performing statistical computations based on such aggregate to identify the effect of each Claims Component on the actual or predicted value of such 1 S Claims.
The present invention also includes and provides a method by which Claims Data will be collected at remote locations, including without limitation, locations proximate geographically to the injury or damaged property, using fixed, mobile or portable data entry and/or computing devices, and analyzed at such remote location, based on analysis of Claims Components of prior and current claims, to determine the most nearly accurate Claims Estimate for such claims.
The present invention also includes and provides a method by which Claims Data for one or more Claims may be entered remotely and transmitted to a server computer to be used as part of and in conjunction with an aggregate of Claims Data collected and stored on such server computer, for the purpose of computing and compiling Claims Components for such Claim. Certain statistical analyses of Claims Components are then used to compare the submitted Claims with such aggregate Claims Data and determine a more accurate Insurance Claim Estimate for the Claims so submitted.
Another variation of the present invention also includes and provides a method by which Claims Data may be entered remotely and transmitted to a server computer to be included in an aggregate of Claims Data collected and stored on such server computer, for the purpose of computing and compiling Claims Components for aggregates of Claims as selected by the user. Various analyses of Claims Components are then used to compare one group of Claims Data with another group of Claims data. The comparisons may be used for a variety of purposes, including without limitation, the assessment of the efficacy of individual adjusters, the assessment of the accuracy of practices and procedures used in one group of Claims, as compared to norms for the groups of Claims Data against which such Claims Data is compared, and the determination of the manner in which such practices and procedures may be improved to achieve greater accuracy, greater consistency, and/or lower cost in estimating insurance claims.
As used herein, an "insurance claim" or "claim" includes any request from an insured party for reimbursement from an insurance provider for a loss suffered by the insured party that is alleged to be an insured loss. In a preferred embodiment, an insurance claim is a claim by an insured party for reimbursement for a loss to real property.
As used herein, an "insurance claim estimate" is a determination of a total cost of settling an insurance claim with an insured party according to predetermined guidelines or any insurance policy possessed by the insured party or both.
As used herein "claims data" mean observations of data related to an insurance claim, including without limitation, various data describing the cause of the claim, the type of losses claimed, the types of labor and materials required for repair and replacement of damaged property, the geographic location of the injury or damage, original cost, age, and manner of use of damaged property, and similar data, as welt as data reflecting how and/or by whom the other data was observed, collected, and inputted.
As used herein, a "Claims Component" is a factor or indicator derived from the review of selected claims data that has been determined to bear on the accuracy and timeliness of processing of an insurance claim. Claims Components are analyzed by comparing them to standards and/or norms computed on selected claims populations. For example, claims might be grouped by region, severity, type of peril, or the like.
Once Claims Components are identified and specified for a particular implementation of the method of the invention, standard statistical techniques are applied to determine the sensitivity of the accuracy of insurance estimates to the respective Claims Components. Statistical techniques may include, among other things, the determination of variances, correlation and factor analysis, analysis of variants, linear regression techniques and other formulas and algorithms. The results of the application of such statistical techniques are then used to identify the areas where significant improvements in the processing of insurance claims may be achieved, typically by refererne to selected aggregates of claims. For example, the Claims Components requiring the most attention may be different for damages from floods than from earthquakes, or may be different depending on the severity of the claim presented. The use of the methods of the invention are designed to tailor claims adjustment techniques to the particular profile of claims an adjuster or group of adjusters is likely to encounter in particular job assignments.
The Claims Data compendium may also be polled directly in connection with the processing of an individual claim or related group of claims, guiding the adjuster to focus on the elements of the claim having the greatest impact on the ultimate result.
In a preferred embodiment, Claims Components include the following:
"Materials Quality" refers to a threefold analysis of the type and quality of materials used to estimate a claim value. Claims data input from an individual claim are reviewed to determine what quality of materials were used in the computation of thc:
claim amount. One method of specifying materials quality would be "good", "better" and "best." The use of higher quality materials generally, but not always, correlates with excessive costs. In some cases, however, the specification of higher quality materials may result in lower overall claims costs.
"Multiple Minimum Charges" refers to the use of minimum order quantity charges more than once for a particular commodity or service used in computing the claim. The presence of multiple minimum charges for a particular commodity suggests the possibility that overall claims expense could have been reduced by aggregating orders for the particular commodity or service.
"Materials Overlap" refers to whether the charges listed in an estimate line are properly proportional to dimensions entered for the claimed loss. Materials overlap s analysis may determine that a claim estimate contains more material than is necessary for the size of the item being repaired and/or it may determine that the estimate was based on inaccurate measurements of the item being repaired.
"Use of Operations" refers to an analysis of the frequency of operations by estimate line. This analysis may identify opportunities to reduce frequency of operations and thus reduce claims costs.
"Application of Tax" refers to an analysis of the manner in which various taxes are used in computing the claims estimate and the identification of practices and procedures by which either (a) inaccuracies in estimation may be reduced, or (b) transactions may be structured to reduce effective tax rates.
"Fulfillment Analysis" refers to an analysis of how materials are provided and priced, whether supplied by a direct replacement provider or by a customer and identifies excessive prices compared to forecast prices and/or industry data for such materials.
"Depreciation Applied" refers to an analysis of coverage under the underlying insurance policy and the manner in which depreciation is factored into the claim estimate, in particular to identify failures to apply necessary depreciation as permitted under the policy.
"Regional Analysis" refers to an analysis of claims severity by relevant geographic coverage, for example by state, 5-digit, or 3-digit zip codes or combinations thereof. Areas with the highest severity (e.g, greatest dollar amounts) are then analyzed for factors which might explain regional deviations or identify instances of unnecessarily high payouts.
J
"Deductions for Windows and Doors" refers to an analysis of detailed measurements of items being repaired, for example, to assure that deductions were taken from room measurements when doors and windows were present.
"Overhead and Profit" refers to an analysis of how contractor overhead and profit were used in computing claims values, including without limitation whether overhead and profit are consistent by adjuster and region, whether overhead and profit were figured on waste, whether overhead and profit is figured multiply for contractors and sub-contractors, and whether overhead and profit factors are distributed appropriately among a plurality of claims sev erity groups.
"Claim Cycle Time" refers to the time to close the settlement of an insurance claim by an adjuster, to identify delays and efficiencies and the factors that cause such deficiencies and efficiencies.
"Waste Factors" involve the use of allowances for excess purchases of materials to allow for waste. Waste may be compared to threshold percentage figures to identify areas for improvement.
"Unit of Measure Analysis" refers to the manner in which line items on an estimate are measured, including choice of the incremental measure or rounding factor and/or the use of lump sum or standardized minimum measures.
"Debris Removal" refers to an analysis of the cost and manner of debris removal, identifying factors that could reduce debris removal expense.
"Peril Analysis" refers to an analysis of the nature of the peril that caused the claim and the manner in which it affected the claims estimate.
"Data Outlier Analysis" refers to the identification of data that are outside of predicted or observed norms and an analysis of how the quantity of outlying data is affected by the various factors, such as severity, regional variation, peril and the like.
"Client Specification Best Practices" entails performing quantitative and qualitative analysis of claims management techniques.
"Data Integrity Scorecard" refers to the determination of the reliability of reported data, and thus, its utility in performing other analysis, including without limitation the identification of missing, incomplete and/or inconsistent data.
"Assembly Correlation" refers to the verification that labor and material components and/or other claimed expenses fall within expectations and experience for the type of loss incurred. For example, one would expect roof damage to result from a hail storm, but not damage to the basement of a house.
"Reciprocal Item Correlation" refers to the qualitative and quantitative comparison of material removed with material replaced. For example, if more material is I 5 used in the repair than was removed to allow for the repair, there is a possibility of an excessive expenditure on the claim in question. As another example, if shingles are removed, it would be anticipated that underlayment felt would also have to be removed and replaced.
IMPLEMENTATION
The methods and processes of the present invention employ one or more computing devices, comprising one or more computers with the ability to accept data from a variety of sources, for example, data entry from an attached keyboard, transmission and reception by electronic means, and/or from removable electronic storage media such as disks and tapes, process such data, store data, retrieve, display, print, and/or transmit such data. In the preferred embodiment, one or more computers is used, singly or in combination, as a Primary Computer, being a central repository of Claims Data, having been received from electronic transmission, keying devices, and/or removable storage media. Such Primary Computer may have installed in it computer software for performing the computations hereinafter described or may be limited in function to providing selected data on demand by the other computer or computers. In the latter case, a separate computer may be used to perform data analysis using the data stored on the Primary Computer. The system implementing the method may also include one or more computers ("Remote Computers') that may transmit and receive data to and from the Primary Computer. Each Remote Computer may act solely as an input and output device with its display controlled by the Primary Computer, or it may be fitted with software that permits the validation and formatting of Claims Data, as well as software to perform computations on Claims Data stored locally on such Remote Computer.
The means of transmission of data between Remote Computer and Primary Computer may be by a variety of electronic means, including without limitation direct electrical connection, local area network, wireless protocol (for example, that specified by IEEE standard 802. Z 1 ), by telephone modem, cable modem, and cellular telephone.
The system and method may be initiated by loading on to the Primary Computer software to store and retrieve Claims Data in structured form for subsequent retrieval and processing and, typically, the loading of volumes of historical claims data.
The user of such system shall next determine the Claims Components to be computed and stored for the respective Claims Data stored on the Primary Computer. The software may be configured to add additional Claims Components and Claims Components computations over time. The Primary Computer then will serve as the S principal repository of Claims Data and (possibly with an attached computer) the means of performing the data analysis described above.
Each adjuster may be provided with a Remote Computer, which may be a desktop computer, a laptop computer, or a hand-held or other portable device, which he or she may use to enter Claims Data for new Claims. The Remote Computer may contain software and hardware means for storing and retrieving Claims Data and using the methods of the invention to process the Claims assigned to such adjuster. In the event that an individual Claim or group of Claims exceeds in size and/or complexity such adjuster's authority to settle without supervisory approval, such Remote Computer may be fitted with software enabling the adjuster to transmit Claims Data from such Remote Computer to the Primary Computer for analysis using the method of the invention and review and approval by supervisory personnel. In the event that such adjuster is not required to obtain supervisory approval for the settlement of a particular Claim, thf:
Remote Computer will be fitted with sofrivare and hardware enabling Claims Data on Claims settled by such adjuster to be transmitted to the Primary Computer to be stored with other Claims Data. The analytic methods of this invention may then be used to assess the accuracy of such adjuster in settling or otherwise disposing of the Claims assigned to him or her and/or to compare the practices and procedures employed by such adjuster with practices and procedures o1 other adjusters.
The Primary Computer may itself be a Remote Computer to another Primary Computer, such that a larger aggregate of data may be compiled and analyzed using the methods of this invention. For example, one Primary Computer may aggregate Claims Data from Claims for a particular region serviced by an insurer. In turn, that Primary Computer may function as a Remote Computer to a larger Primary Computer maintained by the same insurer to collect Claims Data from a plurality of regions serviced by the insurer. In the alternative, the Primary Computer may be operated by a third party service provider or consultant that may apply the analytic methods of this invention to more than one insurer and report back to each such insurer on its performance relative to norms computed based on the aggregate of all Claims Data and Claims Components maintained and computed by such service provider.
DEVICES, SYSTEMS, AND METHODS
FIELD OF THE INVENTION
The present invention relates to the use of computerized information collection, storage, retrieval, computation and analysis techniques as a part of a business process to assist in the improvement of the practices and procedures for estimating the value of insurance claims and for determining underwriting criteria for such insurance.
The present invention relates specifically to methods for the improvement of individual property claim estimates, as well as estimation procedures and their counterpart underwriting processes. The present invention also relates to systems and devices useful for implementing the methods disclosed herein.
BACKGROUND
The success of an insurer is dependent on its ability to make sound decisions in underwriting risks and its ability to properly estimate and settle claims when losses occur, consistent with its contractual obligations to its insureds. Because claims adjusters must make decisions based on their individual collection of relevant claims data and their individual experiences, all but the largest and most complex claims adjustment decisions are made by adjusters in the field. Depending on the experience level of the adjuster, the adjuster may make settlement recommendations in individual cases with little or no supervision or approval from a centralized source.
Historically, adjusters have been given great latitude in making decisions in the field and their work has been reviewed primarily on an anecdotal basis. While adjusters have been provided with compendia of information relating to relevant costs, as well as a range of computational methods and devices for assisting in working up claims estimates, they have limited access to useful aggregate data on previously settled claims. Their individual practices and procedures typically have not been reviewed rigorously to determine how their individual practices and procedures compare, favorably or unfavorably, to norms determined for groups of claims similar to those given to them to adjust. They have not been provided typically with suggestions as to improvements in the manner in which they make determinations.
The advent of computerized database techniques, remote computing, and data communications methods now provide tools that can be useful as components of new methods, such as the present invention, to allow the adjuster and his or her supervisors to use historical and current claims data actively in both the adjustment of individual claims and in the determination of ways for improving adjustment methodologies going forward.
In addition, the ability to focus on data collected in claims adjustment provides potential benefits for significant improvement in the process of underwriting insurance policies. Specifically, the process of predicting claims severity, determining adjustment costs, and determining loss payouts can be improved and thus improve the support of underwriting decisions, including without limitation decisions as to whether to accept risks and how to set the insurance premiums that warrant the acceptance of such risks.
What are needed are specific techniques to enable field adjusters, their supervisors, underwriters and other managers to use quantitative experience to best estimate claims and risks in individual matters and to derive highly customized practices and procedures to improve the aggregate outcomes of both claims processing and undenvriting activities.
SUMMARY OF THE INVENTION
The present invention includes and provides a method for improving the accuracy of a property insurance claim estimate, comprising: inputting insurance claim data into a software program; and, analyzing said claim data for excess expenses, wherein said analyzing is performed using two or more claim components selected from the group consisting of materials quality, multiple minimum charges, materials overlap, use of operations, application of tax, fulfillment analysis, depreciation applied, regional analysis, deductions for windows and doors, overhead and profit, claim cycle time, waste factors, unit of measure analysis, debris removal, peril analysis, data outlier analysis, client specification best practices, assembly correlation and reciprocal item correlation and data integrity scorecard.
The present invention includes and provides a method for reviewing property insurance claims data, comprising: inputting insurance claims data into a software program; and, analyzing said claims data for excess expenses, wherein said analyzing is performed using two or more claim components selected from the group consisting of materials quality, multiple minimum charges, materials overlap, use of operations, application of tax, fulfillment analysis, depreciation applied, regional analysis, deductions for windows and doors, overhead and profit, claim cycle time, waste factors, unit of measure analysis, debris removal, peril analysis, data outlier analysis, client specification best practices, assembly correlation, reciprocal item correlation, and data integrity scorecard.
The present invention includes and provides a method for reducing property claims settlement costs, comprising: inputting insurance claim data into a computer program; and, analyzing said claims data for accuracy, wherein said analyzing is performed using t<vo or more claim components selected from the group consisting of materials quality, multiple minimum charges, materials overlap, use of operations., application of tat, fulfillment analysis, depreciation applied, regional analysis, deductions for windows and doors, overhead and profit, claim cycle time, waste factors, unit of measure analysis, debris removal, peril analysis, data outlier analysis, client specification best practices, assembly correlation, reciprocal item correlation, and data integrity scorecard.
The present invention includes and provides a program storage device readable by a machine, tangibly embodying a program of instructions executable by a machine to perform method steps to reducing property claim settlement costs comprising:
inputting insurance claim data into a computer program; and, analyzing said claim data for accuracy, wherein said analyzing is performed using two or more claim components selected from the group consisting of materials quality, multiple minimum charges, materials overlap, use of operations, application of tax, fulfillment analysis, depreciation applied, regional analysis, deductions for windows and doors, overhead and profit, claim cycle time, waste factors, unit of measure analysis, debris removal, peril analysis, data outlier analysis, client specification best practices, assembly correlation, reciprocal item 1 S correlation, and data integrity scorecard.
DESCRIPTION OF THE IIWENTION
The present invention relates generally to methods for improving the processing of insurance claims through the systematic collection of data and the analysis of the:
effects of selected components of claims data on individual claims or groups of claims.
The present invention relates more specifically to methods for the improvement of those processes as they apply to property claim estimates and/or property insurance underwriting determinations.
The present invention includes and provides methods that rnay be applied to the foregoing processes as they may be applied to any type of insurance claim for which certain types of Claims Component information is applicable. In a preferred embodiment, the present invention is used with respect to the analysis of technique, for processing property insurance claims and, more specifically, real property insurance claims, including but not limited to residential and commercial real property, such as apartments, houses, condominiums, office buildings, mobile homes, and industrial buildings. The present invention can also be used with respect to other forms of insurance known in the art, including personal property (unscheduled personal property and business property, for example), and insurance that covers the cost of temporary living space and additional living expenses in the event of a significant loss to real property.
The present invention includes and provides a method fox identifying Claims Components (as described below) that affect the accuracy of the process of estimating insurance claims, by collecting Claims Data from a selected aggregate of historical claims for which Claims Data has been recorded, computing Claims Components for each such claim, and performing statistical computations based on such aggregate to identify the effect of each Claims Component on the actual or predicted value of such 1 S Claims.
The present invention also includes and provides a method by which Claims Data will be collected at remote locations, including without limitation, locations proximate geographically to the injury or damaged property, using fixed, mobile or portable data entry and/or computing devices, and analyzed at such remote location, based on analysis of Claims Components of prior and current claims, to determine the most nearly accurate Claims Estimate for such claims.
The present invention also includes and provides a method by which Claims Data for one or more Claims may be entered remotely and transmitted to a server computer to be used as part of and in conjunction with an aggregate of Claims Data collected and stored on such server computer, for the purpose of computing and compiling Claims Components for such Claim. Certain statistical analyses of Claims Components are then used to compare the submitted Claims with such aggregate Claims Data and determine a more accurate Insurance Claim Estimate for the Claims so submitted.
Another variation of the present invention also includes and provides a method by which Claims Data may be entered remotely and transmitted to a server computer to be included in an aggregate of Claims Data collected and stored on such server computer, for the purpose of computing and compiling Claims Components for aggregates of Claims as selected by the user. Various analyses of Claims Components are then used to compare one group of Claims Data with another group of Claims data. The comparisons may be used for a variety of purposes, including without limitation, the assessment of the efficacy of individual adjusters, the assessment of the accuracy of practices and procedures used in one group of Claims, as compared to norms for the groups of Claims Data against which such Claims Data is compared, and the determination of the manner in which such practices and procedures may be improved to achieve greater accuracy, greater consistency, and/or lower cost in estimating insurance claims.
As used herein, an "insurance claim" or "claim" includes any request from an insured party for reimbursement from an insurance provider for a loss suffered by the insured party that is alleged to be an insured loss. In a preferred embodiment, an insurance claim is a claim by an insured party for reimbursement for a loss to real property.
As used herein, an "insurance claim estimate" is a determination of a total cost of settling an insurance claim with an insured party according to predetermined guidelines or any insurance policy possessed by the insured party or both.
As used herein "claims data" mean observations of data related to an insurance claim, including without limitation, various data describing the cause of the claim, the type of losses claimed, the types of labor and materials required for repair and replacement of damaged property, the geographic location of the injury or damage, original cost, age, and manner of use of damaged property, and similar data, as welt as data reflecting how and/or by whom the other data was observed, collected, and inputted.
As used herein, a "Claims Component" is a factor or indicator derived from the review of selected claims data that has been determined to bear on the accuracy and timeliness of processing of an insurance claim. Claims Components are analyzed by comparing them to standards and/or norms computed on selected claims populations. For example, claims might be grouped by region, severity, type of peril, or the like.
Once Claims Components are identified and specified for a particular implementation of the method of the invention, standard statistical techniques are applied to determine the sensitivity of the accuracy of insurance estimates to the respective Claims Components. Statistical techniques may include, among other things, the determination of variances, correlation and factor analysis, analysis of variants, linear regression techniques and other formulas and algorithms. The results of the application of such statistical techniques are then used to identify the areas where significant improvements in the processing of insurance claims may be achieved, typically by refererne to selected aggregates of claims. For example, the Claims Components requiring the most attention may be different for damages from floods than from earthquakes, or may be different depending on the severity of the claim presented. The use of the methods of the invention are designed to tailor claims adjustment techniques to the particular profile of claims an adjuster or group of adjusters is likely to encounter in particular job assignments.
The Claims Data compendium may also be polled directly in connection with the processing of an individual claim or related group of claims, guiding the adjuster to focus on the elements of the claim having the greatest impact on the ultimate result.
In a preferred embodiment, Claims Components include the following:
"Materials Quality" refers to a threefold analysis of the type and quality of materials used to estimate a claim value. Claims data input from an individual claim are reviewed to determine what quality of materials were used in the computation of thc:
claim amount. One method of specifying materials quality would be "good", "better" and "best." The use of higher quality materials generally, but not always, correlates with excessive costs. In some cases, however, the specification of higher quality materials may result in lower overall claims costs.
"Multiple Minimum Charges" refers to the use of minimum order quantity charges more than once for a particular commodity or service used in computing the claim. The presence of multiple minimum charges for a particular commodity suggests the possibility that overall claims expense could have been reduced by aggregating orders for the particular commodity or service.
"Materials Overlap" refers to whether the charges listed in an estimate line are properly proportional to dimensions entered for the claimed loss. Materials overlap s analysis may determine that a claim estimate contains more material than is necessary for the size of the item being repaired and/or it may determine that the estimate was based on inaccurate measurements of the item being repaired.
"Use of Operations" refers to an analysis of the frequency of operations by estimate line. This analysis may identify opportunities to reduce frequency of operations and thus reduce claims costs.
"Application of Tax" refers to an analysis of the manner in which various taxes are used in computing the claims estimate and the identification of practices and procedures by which either (a) inaccuracies in estimation may be reduced, or (b) transactions may be structured to reduce effective tax rates.
"Fulfillment Analysis" refers to an analysis of how materials are provided and priced, whether supplied by a direct replacement provider or by a customer and identifies excessive prices compared to forecast prices and/or industry data for such materials.
"Depreciation Applied" refers to an analysis of coverage under the underlying insurance policy and the manner in which depreciation is factored into the claim estimate, in particular to identify failures to apply necessary depreciation as permitted under the policy.
"Regional Analysis" refers to an analysis of claims severity by relevant geographic coverage, for example by state, 5-digit, or 3-digit zip codes or combinations thereof. Areas with the highest severity (e.g, greatest dollar amounts) are then analyzed for factors which might explain regional deviations or identify instances of unnecessarily high payouts.
J
"Deductions for Windows and Doors" refers to an analysis of detailed measurements of items being repaired, for example, to assure that deductions were taken from room measurements when doors and windows were present.
"Overhead and Profit" refers to an analysis of how contractor overhead and profit were used in computing claims values, including without limitation whether overhead and profit are consistent by adjuster and region, whether overhead and profit were figured on waste, whether overhead and profit is figured multiply for contractors and sub-contractors, and whether overhead and profit factors are distributed appropriately among a plurality of claims sev erity groups.
"Claim Cycle Time" refers to the time to close the settlement of an insurance claim by an adjuster, to identify delays and efficiencies and the factors that cause such deficiencies and efficiencies.
"Waste Factors" involve the use of allowances for excess purchases of materials to allow for waste. Waste may be compared to threshold percentage figures to identify areas for improvement.
"Unit of Measure Analysis" refers to the manner in which line items on an estimate are measured, including choice of the incremental measure or rounding factor and/or the use of lump sum or standardized minimum measures.
"Debris Removal" refers to an analysis of the cost and manner of debris removal, identifying factors that could reduce debris removal expense.
"Peril Analysis" refers to an analysis of the nature of the peril that caused the claim and the manner in which it affected the claims estimate.
"Data Outlier Analysis" refers to the identification of data that are outside of predicted or observed norms and an analysis of how the quantity of outlying data is affected by the various factors, such as severity, regional variation, peril and the like.
"Client Specification Best Practices" entails performing quantitative and qualitative analysis of claims management techniques.
"Data Integrity Scorecard" refers to the determination of the reliability of reported data, and thus, its utility in performing other analysis, including without limitation the identification of missing, incomplete and/or inconsistent data.
"Assembly Correlation" refers to the verification that labor and material components and/or other claimed expenses fall within expectations and experience for the type of loss incurred. For example, one would expect roof damage to result from a hail storm, but not damage to the basement of a house.
"Reciprocal Item Correlation" refers to the qualitative and quantitative comparison of material removed with material replaced. For example, if more material is I 5 used in the repair than was removed to allow for the repair, there is a possibility of an excessive expenditure on the claim in question. As another example, if shingles are removed, it would be anticipated that underlayment felt would also have to be removed and replaced.
IMPLEMENTATION
The methods and processes of the present invention employ one or more computing devices, comprising one or more computers with the ability to accept data from a variety of sources, for example, data entry from an attached keyboard, transmission and reception by electronic means, and/or from removable electronic storage media such as disks and tapes, process such data, store data, retrieve, display, print, and/or transmit such data. In the preferred embodiment, one or more computers is used, singly or in combination, as a Primary Computer, being a central repository of Claims Data, having been received from electronic transmission, keying devices, and/or removable storage media. Such Primary Computer may have installed in it computer software for performing the computations hereinafter described or may be limited in function to providing selected data on demand by the other computer or computers. In the latter case, a separate computer may be used to perform data analysis using the data stored on the Primary Computer. The system implementing the method may also include one or more computers ("Remote Computers') that may transmit and receive data to and from the Primary Computer. Each Remote Computer may act solely as an input and output device with its display controlled by the Primary Computer, or it may be fitted with software that permits the validation and formatting of Claims Data, as well as software to perform computations on Claims Data stored locally on such Remote Computer.
The means of transmission of data between Remote Computer and Primary Computer may be by a variety of electronic means, including without limitation direct electrical connection, local area network, wireless protocol (for example, that specified by IEEE standard 802. Z 1 ), by telephone modem, cable modem, and cellular telephone.
The system and method may be initiated by loading on to the Primary Computer software to store and retrieve Claims Data in structured form for subsequent retrieval and processing and, typically, the loading of volumes of historical claims data.
The user of such system shall next determine the Claims Components to be computed and stored for the respective Claims Data stored on the Primary Computer. The software may be configured to add additional Claims Components and Claims Components computations over time. The Primary Computer then will serve as the S principal repository of Claims Data and (possibly with an attached computer) the means of performing the data analysis described above.
Each adjuster may be provided with a Remote Computer, which may be a desktop computer, a laptop computer, or a hand-held or other portable device, which he or she may use to enter Claims Data for new Claims. The Remote Computer may contain software and hardware means for storing and retrieving Claims Data and using the methods of the invention to process the Claims assigned to such adjuster. In the event that an individual Claim or group of Claims exceeds in size and/or complexity such adjuster's authority to settle without supervisory approval, such Remote Computer may be fitted with software enabling the adjuster to transmit Claims Data from such Remote Computer to the Primary Computer for analysis using the method of the invention and review and approval by supervisory personnel. In the event that such adjuster is not required to obtain supervisory approval for the settlement of a particular Claim, thf:
Remote Computer will be fitted with sofrivare and hardware enabling Claims Data on Claims settled by such adjuster to be transmitted to the Primary Computer to be stored with other Claims Data. The analytic methods of this invention may then be used to assess the accuracy of such adjuster in settling or otherwise disposing of the Claims assigned to him or her and/or to compare the practices and procedures employed by such adjuster with practices and procedures o1 other adjusters.
The Primary Computer may itself be a Remote Computer to another Primary Computer, such that a larger aggregate of data may be compiled and analyzed using the methods of this invention. For example, one Primary Computer may aggregate Claims Data from Claims for a particular region serviced by an insurer. In turn, that Primary Computer may function as a Remote Computer to a larger Primary Computer maintained by the same insurer to collect Claims Data from a plurality of regions serviced by the insurer. In the alternative, the Primary Computer may be operated by a third party service provider or consultant that may apply the analytic methods of this invention to more than one insurer and report back to each such insurer on its performance relative to norms computed based on the aggregate of all Claims Data and Claims Components maintained and computed by such service provider.
Claims (31)
1. A method for improving the accuracy of a property insurance claim, comprising:
inputting insurance claim data into a software program; and, analyzing said claim data for excess expenses, wherein said analyzing is performed using two or more claim components selected from the group consisting of materials quality, multiple minimum charges, materials overlap, use of operations, application of tax, fulfillment analysis, depreciation applied, regional analysis, deductions for windows and doors, overhead and profit, claim cycle time, waste factors, unit of measure analysis, debris removal, peril analysis, data outlier analysis, client specification best practices, assembly correlation, reciprocal item correlation and data integrity scorecard.
inputting insurance claim data into a software program; and, analyzing said claim data for excess expenses, wherein said analyzing is performed using two or more claim components selected from the group consisting of materials quality, multiple minimum charges, materials overlap, use of operations, application of tax, fulfillment analysis, depreciation applied, regional analysis, deductions for windows and doors, overhead and profit, claim cycle time, waste factors, unit of measure analysis, debris removal, peril analysis, data outlier analysis, client specification best practices, assembly correlation, reciprocal item correlation and data integrity scorecard.
2. The method of claim 1, wherein said software program resides on a portable computing device.
3. The method of claim 1, wherein said analyzing is performed by said software program.
4. The method of claim 1, wherein said inputting is performed by a claim adjuster at the location of said claim.
5. The method of claim 1, wherein said inputting and said analyzing are performed remotely from the location of said claim.
6. The method of claim 1, further comprising transmitting said claim data to a centralized database.
7. The method of claim 6, wherein said transmitting is performed before said analyzing.
8. The method of claim 6, wherein said analyzing is performed at the location of said centralized database.
9. The method of claim 1, wherein said analyzing is performed using five or more claim components selected from the group consisting of materials quality, multiple minimum charges, materials overlap, use of operations, application of tax, fulfillment analysis, depreciation applied, regional analysis, deductions for windows and doors, overhead and profit, claim cycle time, waste factors, unit of measure analysis, debris removal, peril analysis, data outlier analysis, client specification best practices, reciprocal item correlation, replacement correlation and data integrity scorecard.
10. The method of claim 1, wherein said analyzing is performed using ten or more claim components selected from the group consisting of materials quality, multiple minimum charges, materials overlap, use of operations, application of tax, fulfillment analysis, depreciation applied, regional analysis, deductions for windows and doors, overhead and bbprofit, claim cycle time, waste factors, unit of measure analysis, debris removal, peril analysis, data outlier analysis, client specification best practices, assembly correlation, reciprocal item correlation and data integrity scorecard.
11. A method for reviewing property claim data, comprising:
inputting insurance claim data into a software program; and, analyzing said claim data for excess expenses, wherein said analyzing is performed using two or more claim components selected from the group consisting of materials quality, multiple minimum charges, materials overlap, use of operations, application of tax, fulfillment analysis, depreciation applied, regional analysis, deductions for windows and doors, overhead and profit, claim cycle time, waste factors, unit of measure analysis, debris removal, peril analysis, data outlier analysis, client specification best practices, assembly correlation, reciprocal item correlation and data integrity scorecard.
inputting insurance claim data into a software program; and, analyzing said claim data for excess expenses, wherein said analyzing is performed using two or more claim components selected from the group consisting of materials quality, multiple minimum charges, materials overlap, use of operations, application of tax, fulfillment analysis, depreciation applied, regional analysis, deductions for windows and doors, overhead and profit, claim cycle time, waste factors, unit of measure analysis, debris removal, peril analysis, data outlier analysis, client specification best practices, assembly correlation, reciprocal item correlation and data integrity scorecard.
12. The method of claim 11, wherein said software program resides on a portable computing device.
13. The method of claim 11, wherein said analyzing is performed by said software program.
14. The method of claim 11, wherein said inputting is performed by a claim adjuster at the location of said claim.
15. The method of claim 11, wherein said inputting and said analyzing are performed remotely from the location of said claim.
16. The method of claim 11, further comprising transmitting said claim data to a centralized database.
17. The method of claim 16, wherein said transmitting is performed before said analyzing.
18. The method of claim 16, wherein said analyzing is performed at the location of said centralized database.
19. The method of claim 11, wherein said analyzing is performed using five or more claim components selected from the group consisting of materials quality, multiple minimum charges, materials overlap, use of operations, application of tax, fulfillment analysis, depreciation applied, regional analysis, deductions for windows and doors, overhead and profit, claim cycle time, waste factors, unit of measure analysis, debris removal, peril analysis, data outlier analysis, client specification best practices, assembly correlation, reciprocal item correlation and data integrity scorecard.
20. The method of claim 11, wherein said analyzing is performed using ten or more claim components selected from the group consisting of materials quality, multiple minimum charges, materials overlap, use of operations, application of tax, fulfillment analysis, depreciation applied, regional analysis, deductions for windows and doors, overhead and profit, claim cycle time, waste factors, unit of measure analysis, debris removal, peril analysis, data outlier analysis, client specification best practices, assembly correlation, reciprocal item correlation and data integrity scorecard.
21. A method for reducing property claim settlement costs, comprising:
inputting insurance claim data into a computer program; and, analyzing said claim data for accuracy, wherein said analyzing is performed using two or more claim components selected from the group consisting of materials quality, multiple minimum charges, materials overlap, use of operations, application of tax, fulfillment analysis, depreciation applied, regional analysis, deductions for windows and doors, overhead and profit, claim cycle time, waste factors, unit of measure analysis, debris removal, peril analysis, data outlier analysis, client specification best practices, assembly correlation, reciprocal item correlation and data integrity scorecard.
inputting insurance claim data into a computer program; and, analyzing said claim data for accuracy, wherein said analyzing is performed using two or more claim components selected from the group consisting of materials quality, multiple minimum charges, materials overlap, use of operations, application of tax, fulfillment analysis, depreciation applied, regional analysis, deductions for windows and doors, overhead and profit, claim cycle time, waste factors, unit of measure analysis, debris removal, peril analysis, data outlier analysis, client specification best practices, assembly correlation, reciprocal item correlation and data integrity scorecard.
22. The method of claim 21, wherein said software program resides on a portable computing device.
23. The method of claim 21, wherein said analyzing is performed by said software program.
24. The method of claim 21, wherein said inputting is performed by a claim adjuster at the location of said claim.
25. The method of claim 21, wherein said inputting and said analyzing are performed remotely from the location of said claim.
26. The method of claim 21, further comprising transmitting said claim data to a centralized database.
27. The method of claim 26, wherein said transmitting is performed before said analyzing.
28. The method of claim 26, wherein said analyzing is performed at the location of said centralized database.
29. The method of claim 21, wherein said analyzing is performed using five or more claim components selected from the group consisting of materials quality, multiple minimum charges, materials overlap, use of operations, application of tax, fulfillment analysis, depreciation applied, regional analysis, deductions for windows and doors, overhead and profit, claim cycle time, waste factors, unit of measure analysis, debris removal, peril analysis, data outlier analysis, client specification best practices, assembly correlation, reciprocal item correlation and data integrity scorecard.
30. The method of claim 21, wherein said analyzing is performed using ten or more claim components selected from the group consisting of materials quality, multiple minimum charges, materials overlap, use of operations, application of tax, fulfillment analysis, depreciation applied, regional analysis, deductions for windows and doors, overhead and profit, claim cycle time, waste factors, unit of measure analysis, debris removal, peril analysis, data outlier analysis, client specification best practices, assembly correlation, reciprocal item correlation and data integrity scorecard.
31. A program storage device readable by a machine, tangibly embodying a program of instructions executable by a machine to perform method steps to reducing property claim settlement costs comprising:
inputting insurance claim data into a computer program; and, analyzing said claim data for accuracy, wherein said analyzing is performed using two or more claim components selected from the group consisting of materials quality, multiple minimum charges, materials overlap, use of operations, application of tax, fulfillment analysis, depreciation applied, regional analysis, deductions for windows and doors, overhead and profit, claim cycle time, waste factors, unit of measure analysis, debris removal, peril analysis, data outlier analysis, client specification best practices, assembly correlation, reciprocal item correlation and data integrity scorecard.
inputting insurance claim data into a computer program; and, analyzing said claim data for accuracy, wherein said analyzing is performed using two or more claim components selected from the group consisting of materials quality, multiple minimum charges, materials overlap, use of operations, application of tax, fulfillment analysis, depreciation applied, regional analysis, deductions for windows and doors, overhead and profit, claim cycle time, waste factors, unit of measure analysis, debris removal, peril analysis, data outlier analysis, client specification best practices, assembly correlation, reciprocal item correlation and data integrity scorecard.
Applications Claiming Priority (2)
| Application Number | Priority Date | Filing Date | Title |
|---|---|---|---|
| US31617802A | 2002-12-11 | 2002-12-11 | |
| US10/316,178 | 2002-12-11 |
Publications (1)
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|---|---|
| CA2429767A1 true CA2429767A1 (en) | 2004-06-11 |
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Family Applications (1)
| Application Number | Title | Priority Date | Filing Date |
|---|---|---|---|
| CA 2429767 Abandoned CA2429767A1 (en) | 2002-12-11 | 2003-05-23 | Methods for improving insurance claim accuracy and related devices, systems, and methods |
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| CA (1) | CA2429767A1 (en) |
Cited By (3)
| Publication number | Priority date | Publication date | Assignee | Title |
|---|---|---|---|---|
| US10373256B1 (en) * | 2013-05-10 | 2019-08-06 | United Services Automobile Association (Usaa) | Automated methods of inspection |
| US10387961B1 (en) | 2013-03-08 | 2019-08-20 | United Services Automobile Association (Usaa) | Intelligent methods of inspection for property and casualty insurance claims |
| US10896468B1 (en) * | 2007-06-13 | 2021-01-19 | United Services Automobile Association (Usaa) | Systems and methods for using unmanned aerial vehicles |
-
2003
- 2003-05-23 CA CA 2429767 patent/CA2429767A1/en not_active Abandoned
Cited By (7)
| Publication number | Priority date | Publication date | Assignee | Title |
|---|---|---|---|---|
| US10896468B1 (en) * | 2007-06-13 | 2021-01-19 | United Services Automobile Association (Usaa) | Systems and methods for using unmanned aerial vehicles |
| US11715160B1 (en) | 2007-06-13 | 2023-08-01 | United Services Automobile Association (Usaa) | Systems and methods for using unmanned aerial vehicles |
| US10387961B1 (en) | 2013-03-08 | 2019-08-20 | United Services Automobile Association (Usaa) | Intelligent methods of inspection for property and casualty insurance claims |
| US11074658B1 (en) | 2013-03-08 | 2021-07-27 | United Services Automobile Association (Usaa) | Intelligent methods of inspection for property and casualty insurance claims |
| US11756132B1 (en) | 2013-03-08 | 2023-09-12 | United Services Automobile Association (Usaa) | Intelligent methods of inspection for property and casualty insurance claims |
| US10373256B1 (en) * | 2013-05-10 | 2019-08-06 | United Services Automobile Association (Usaa) | Automated methods of inspection |
| US11210741B1 (en) | 2013-05-10 | 2021-12-28 | United Services Automobile Association (Usaa) | Automated methods of inspection |
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