Worker’s compensation and its attendant insurance system is complicated, with many factors going into insurance premiums as well as underwriting. Data analytics is a system that is used by some workers’ compensation insurance companies to further their goals of speeding the conclusion of claims, reducing fraud, and accurately projecting risk from certain industries or businesses. “Data analytics” is simply the process of compiling and examining certain sets of data in order to draw conclusions out of that information and data.
An insurance underwriter’s job is to help reduce the risk to their employers. Because medical costs are on the rise, the underwriters must now develop more effective methods to improve their risk selections. If an underwriter’s only source of information is from the insurance agent and from the business purchasing insurance, risk reduction will be a difficult task. Data analytics can help the underwriter more accurately gauge the risk from a particular business by pulling together such data as how long the business has been around, credit scores, financial stability, OSHA violations, and safety reports.
Data analytics will also provide the opportunity for “predictive modeling,” which is a process that allows an underwriter to test the probability of a particular outcome. An underwriter can look at a business’s past and identify particular trends and patterns. Looking at a business’s pattern of violations and fines can help with this. For example, if a business is fined for a violation, the business may decide that it is cheaper to just pay the fine repeatedly instead of actually fixing the problem. Looking at this pattern of infractions can help predict a future of work-related injuries.
Medical provider fraud is also a target of data analytics, as well as recent legislation. Some computer programs have been developed to help identify and stop fraud. One area where fraud is often seen in these cases is for a provider to bill for additional services that were never provided to an injured worker. Through data analytics, it is possible to project how long a course of treatment should reasonably be taking, such as procedure time or types of procedures, and then identify where a provider may be fraudulently overbilling.
Data analytics and projecting costs and risks can impact your business’s workers’ compensation insurance. Call me today at (714) 516-8188 and let me help your business and its workers’ compensation claims process.