Leveraging Data…
To Manage Casualty Total Cost of Risk
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Mike Douglas FCII, CPCU, ARe, ARM, APA, AIC, ARP, AIC Chartered Insurer Director of Business Development Aon Global Risk Consulting - Philadelphia
Introductions
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Leveraging Data - The Opportunity
Loss Costs continue to be the primary driver of Total Cost of Risk (TCOR) in Casualty
Data is the key component in identifying cost drivers and creating more effective and sustainable loss prevention and claims management efforts
Data is more available and accessible than ever:– Increased Utilization and Improved
RMIS Systems– Emphasis on Better and More
Consistent Reporting
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Traditional Approach – The very tired “Pie Chart”
The Traditional approach to Total Cost of Risk has been on how to “measure” the total costs instead of “managing” the cost drivers…
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What Lies Beneath! – Typical costs for WC risk – Many are Hidden
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Challenges of Traditional Benchmarking
Right data:– Valuation date– Jurisdiction
Right time– Age of benchmarking sources and data
Right Comparison– Are the companies you benchmark against really
comparable to your organization?
Using External Benchmarking Data
External Benchmarking May Not Paint an Accurate Picture
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Re-thinking Benchmarking
Gaining an understanding of the cost drivers:• Identification of Cost-Driving Elements• Benchmarking (Internal and External)
Establishing baselines or KPIs for Processes using your own data
Creating a process of monitoring or Casualty Dashboarding
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Managing Total Cost of Risk – Simplification
StatePass-
ThroughsPremiums
Coverage
Medical Strategy
ClaimsProcess
Actuarial
DisabilityManagement
LitigationManagement
InformationManagement
Prevention
Collateral
Program Structure
Consider the following 12 Cost Driving Elements
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Leverage carriers, TPAs and brokers for information on each cost-driving element
Examples: Claims closure rates Medical-to-indemnity conversion rates Litigation rates Percent of medical to total cost Report lag time
Do an initial assessment of your program
The Next Step - Establishing KPIs
The Pieces of the TCOR Puzzle that Drive Your Costs
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Sample Executive Summary Dashboard
An Initial Analysis will:
Establish your own KPIs
Identify areas of focus
Create foundation for dash boarding
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The Next Step – Casualty Dashboarding
Identify KPIs for measuring ongoing program performance Measure on a monthly or quarterly basis More Advanced RMIS Systems can create dashboards with drilldown capabilities
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Dashboards can Depict Information by Organizational Layer
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When designed correctly, RMIS Systems can provide Dynamic Analysis of KPIs
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In Summary
Data remains the key to managing Total Cost of Risk
Traditional outcome-based benchmarking has significant shortcomings
Process benchmarking and establishing KPIs will help direct resources to cost drivers
Leveraging RMIS Systems and dashboarding will result in focused and sustainable management of Total Cost of Risk
For Additional Information Please Contact
Mike Douglas, Aon Global Risk Consulting
Tel: 215 255 1783
Cell: 267 401 0145
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