Copyright TruRisk, LLC 20061 Overview Presentation Strategy—Winning by Changing the Rules (patents...

Copyright TruRisk, LLC 2006 1

Overview Presentation

Strategy—Winning by Changing the Rules

(patents pending)

TruRisk, LLC


Strategy—Winning by Changing the Rules

• Using better information (all medical claims)• Forecasting claim cost more accurately

utilizing proprietary Clinical/Statistical Models• Modifying the distribution system—review all

groups in medical plan or TPA then quote on groups with the greatest profit potential

• Change product attributes• Patent innovations—IP is key asset


More Accurate Risk Assessment—All Lines, All Groups

CUSTOMIZEDCLINICAL

STRUCTURE

RAWDATA

INTEGRATEDPERSON ANDGROUP DATA

CLINICAL/STATISTICALANALYTICS

LTD

LIFE

CAPCOST™ and FIRST DOLLAR

SPEC & AGG

STD

DECISIONSUPPORT:

STOP LOSS

Data and Process Steps

UnderwritingProducts


Paradigm Shift

• Evaluate risk and target favorable groups using Clinical/Statistical Models – Provide more accurate pricing of Disability and Life for

medical customers– Lower loss ratio and its variability– Cross-sell with first dollar or medical stop loss coverage

• Lower future risks—target high risk Disability and Life employees for absence management


Evaluating Disability and Life Risk

• Medical claims and eligibility data required for cases to be underwritten

• Medical and Disability or Life claims do not need to be linked at the person or group level for model development

• Different Clinical/Statistical Models required for different insurance products

• Compare clinical risk to demographic and experience—calculate clinical/demographic ratio


Clinical/Statistical Models

• Benefits of medical underwriting without the cost or intrusion—based on group’s encrypted medical claims, eligibility data and Rx (when required)

• Far greater range in the person-level estimate of incidence rates

• Direct estimate of future risk—forward looking


What Will This Do for Me?

• Decrease loss ratios by using medical data to avoid groups with higher risk than indicated by demographics alone

• Increase close ratios on lower risk groups• Increase market share by cross-selling

Life and Disability to low risk groups with medical coverage—one stop shopping and medical management


Potential Profit Impact LTD

• Based on one client’s data for cases under 1,000 lives– Avoiding the worst 5% of cases would result in increasing margins from

14% to 36%– Assume avoid ½ of bad groups, margin becomes 25% or 11% increase

• Additional profit produced by targeting low clinical risk groups– 21% groups have clinical/demo ratio<.80– 10% premium reduction gives clinical loss ratio=(.8/.9)*(current loss

ratio)=.89 or lower of current

• Retrospective analysis of groups with High Clinical/Demo Ratios had 55% greater Experience/Manual Ratio than Low Clinical/Demo Ratio groups, results from modest size validation study

• 10% reduction in loss ratio is target for LTD and Life


Underwriting Summary Report

Clinical Model Output ReportBasic Case Info

Renewal Month

Case ID Case NameTotal Lives

Ratio: Clinical/ Demo

State SIC CodeGroup

with LTD

1 2 3 4 5 6 7 805 107355 ABC Co. 532 0.471 AB 00710 No 01 111533 GHI LTD 136 0.510 AB 00501 No

02 110900 JKL Co. 553 0.801 AB 00710 Yes11 109332 MNO Co. 457 0.802 AB 00710 No

01 108500 PQR Inc. 372 1.327 AB 00404 No 10 108237 XYZ.org 216 1.331 AB 00601 Yes


Example Clinical Profile for Underwriting and Medical Management—Summary

LTD Morbidity Profile: Summary Level

10.5%

20.4%

27.5%

1.8%

24.6%

91.7%

9.8%

31.2%

5.3%

24.1%20.2%

1.8%

15.4%

68.5%

7.2%

19.0%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

Cancer Circulatory Digestive Liver Mental Musculoskeletal Nervous Trauma

Prevalence

Group ABC Average

Clinical areas w ith potentialfor excess disability


Implementing the Strategy

• Short term– Implement clinical/statistical underwriting and

quantify loss ratio decrease for Life and Disability

• Longer term– Optimize marketing and underwriting tactics– Streamline and automate small/medium group

underwriting processes


Require more information?

Contact:

[email protected]

847.295.2891

mailto:[email protected]

Copyright TruRisk, LLC 20061 Overview Presentation Strategy—Winning by Changing the Rules (patents...

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