Celent: Structured Data a Key Benefit of Loss-Control and Premium Audit Products

Off-the-shelf loss control and premium audit systems are allowing insurers to better serve customers and more meaningfully use the data they collect, according to a new report by Celent, a Boston-based research and advisory firm.

The report by Karlyn Carnahan, head of Celent’s North American property casualty practice, says insurers that purchased “stand-alone” software from vendors are able to produce loss control reports with data configured so that it can be queried to extract specific information. Some of the systems provide contributory aggregate data that allow insurers to compare their operational performance to other carriers.

Carnahan said loss control reports are more useful if the data is delivered in a structured format.

“There’s a massive amount of data in these reports, but typically these reports have been word documents,” Carnahan said. “Vendors are supporting the use of data on how to compare my loss control operation with everyone else. If the report is built into a loss control system it can be converted into structured data.”

Celent conducted a “snap poll” of 26 insurers to find out how they are managing their loss control and premium audit functions. The report says 81% of insurers use their own employees for some loss-control functions, but only 47% operated entirely in-house.

The poll found that 24% all of insurers had purchased a stand-alone loss-control system from a vendor, while 44% of insurers that handle all of their loss-control functions in house use a vendor’s product.

Stand-alone premium audit systems were used by 44% of carriers, with an additional 13% using systems that were included in the insurer’s policy administration or loss control system.

Carnahan said carriers have build their own in-house systems can replicate the functionality of the vendor products as far as creating reports, tracking recommendations, and managing workflow. “The challenge for insurers building homegrown systems is that they rarely have a full time team dedicated to continuing to invest and improve the product functionality,” she said.

Carnahan said respondents to the poll were more likely to say an improvement in customer experience was a key benefit to their stand-alone systems. Customer-facing attributes include managing ongoing service plans, such as the frequency of loss control inspections. The vendor products also provide tools to manage recommendations, communicate and collaborate with customers and disburse risk management information, she said.

Premium audit products provide similar benefits.

“Carriers are interested in trying to determine which audit method is most effective — e.g. do we need to send out a human being, or will a policyholder self audit work?” Carnahan said. “What is the likelihood that this account is misclassified? How is my audit department operating compared to others in terms of workload, turnaround time, etc.”

Celent’s report examines loss control systems offered by Ausum Systems, Origami Risk, Risk Control Technologies and Majesco and premium audit systems offered by Ausum, Origami and Majesco. The report describes the functionality of each system, but does not recommend specific products. Celent said the intent is to help insurers define their core requirements for loss control and premium audit systems as a first step toward creating a short list of vendors for evaluation.

The report is available only to subscribers.