The MSB Claims Analytics Group has provided The Motorists Insurance Group of Columbus Ohio, with technological support, expert analysis, and training resources for several years. With the support of MSB Analytics, Motorists, a company that has historically provided an exceptional level of service to the independent insurance agents who offer its products and services, has trended at the top of the industry in its property claims operations.

The Motorists Insurance Group has always enjoyed a sterling reputation among the host of professional, independent agents who offer its various packages of coverage to their clients. The company’s efficient handling of claims is a major component of the array of services that Motorists’ representative agents and their customers have come to regard so highly.

The professionals at Motorists have achieved high marks in the industry for their service to their clients by maintaining both a strong vision for growth and a phenomenal level of attention to detail that underscores the company’s vision and guarantees its continued success.

Recently, the East Zone Claims Manager for Motorists, Teresa King, offered some insight into the basis for the carrier’s success in the property claims market.

Excellence in the Marketplace

“Our commitment to growth and finding new and even more efficient ways to serve our customers means that we don’t let the current competitive market deter us from accomplishing our mission and fulfilling our vision,” she noted. “We take active steps to do precisely that.”

King stated that the company is currently taking steps to improve vital segments of its service. “Our claims staff is enhancing our service to policyholders by lessening the time between the first contact with the policyholder and the cycle time for inspecting, estimating and paying losses without losing sight of accuracy,” she said.

Motorists is self-avowedly an independent-agent driven company, so it is no accident that every associate of the insurer is committed to maintaining excellent agency relationships. One of the factors that make the company’s relationship with the agents so successful is that the carrier can offer its agents a product that is competitively priced and backed by the industry’s highest level of claims service.

The claims department has set forth on a program that ensures it will achieve the high level of standards the company has historically set for itself. Initiatives include controlling leakage by training adjusters and analyzing the data necessary to implement and monitor the claims best practices. The two go hand in hand, King said.

Education and Execution

“Motorists places a heavy emphasis on the continuing education of our adjusters. Given the difficulty of hiring and maintaining a specialized staff of property adjusters, we provide training to achieve a high skill-set level,” King observed.

To that end, the department offers training sessions designed to update the knowledge base of its staff. Last year’s training package included a focus on the detailed analysis of residential and commercial roofing. This year adjusters will receive additional training on water mitigation and property subrogation.

“MSB’s analytics team has also been a significant factor in our offerings as well,” she stated. “They support our training initiatives with on-site sessions designed to reinforce our understanding of the best practices we’ve adopted along with guidance for optimal use of the estimating software.”

Training is designed to explain and reinforce best practices from both a conceptual and a practical standpoint. “We want our adjusters to understand the philosophy behind the practices. We also want them to follow the best practices so they can write consistently accurate estimates—and that’s highly important,” King stated.

The company has developed a best practice of its own regarding its training regimen. Motorists follows up on its training program with a valuable form of reinforcement. The company’s management attaches the adjuster’s annual performance evaluation to the best practices outcomes the adjusters have been trained to achieve. Monthly statistical analyses and reports Motorists receives from the MSB analytics team offer both individual and company-wide indicators that are used to gauge an adjuster’s effectiveness. These form the basis for the department’s evaluations of its level of excellence.

The Analytics Package

The granular level of detail in these data analyses has impressed the Motorists claims managers and professional staff. With a limited staff, the company relies on that level of reporting for an assessment of how its performance trends with respect to the industry as a whole.

“We don’t have the staffing resources or the means to get as in- depth in the data as we require for maximum quality control, so we need someone to capture that data for us. MSB’s analytics team does a great job of doing precisely that,” King said. “The data we receive from them offers us more than just a monitor of our achievement of the level of procedural operation. We also use the data for its trending analysis that tells us where we’re strong and in what areas we need to improve. The decided advantage of the data is that we cannot only compare ourselves against ourselves, but also against the property claims industry within MSB’s database as a whole.”

MSB’s database, she observed, offers its clients a unique array of industry-wide data that allows them to see where they stack up against their competitors. In Motorists’ case, the story makes for an especially enjoyable read. “We’ve found that through our utilization of best practices methodologies, we are in the vanguard of the industry with respect to the level of excellence in our operation,” King concluded. “Analytics provides a very useful granular guide for us to note how we’re trending compared to our peers.”

Meeting the Challenges Ahead

In the midst of all the good news, there are challenges ahead for the claims function and for Motorists as a whole as they work to maintain the company’s elevated standing in the industry.

“We’ve got to provide the necessary tools to our adjusters that will enhance their level of service to our customers. The products Motorists adopts to achieve their goals and confront the challenges facing them have to feature both ease of use for their staffers and efficiency. It is critical that we are provided with an accurate pricing mechanism,” King noted.

Motorists’ claims department has found that while other technologies offer the company necessary data and reporting functions for analysis, they don’t offer the human analysis in their suite of products. MSB Analytics offers just such a package. As an additional benefit to Motorists, MSB offers this requisite technological support not only for the claims function but for the underwriting function as well, resulting in a much more streamlined operation with both units functioning as highly coordinated and on the same page—a key to the carrier’s outstanding efficiency.

“We greatly appreciate MSB’s analytics staff resources…they give us an uncommon level of support,” King concluded. “They are a vital part of our success story.”

As the property insurance industry moves toward increasing sophistication, full understanding of building and loss characteristics becomes a key to proper underwriting. An Insurance carrier’s claims division with its staff and Independent Adjuster partners is uniquely positioned to help gather high-quality, risk-specific information that is critical for accurately deploying risk-based pricing segmentation models.

However, adjusters presented with arguments for pricing segmentation often reply with “Who cares…this doesn’t impact me”. The reality is that insurance carriers are more dependent than ever on the skill set possessed by their adjusting teams and the information they can provide. In order to fully understand the importance of the adjuster’s role in this process, we must first understand the value of this information to the carrier.

“Show me the Money” — The Carrier Perspective

For decades, property insurance carriers have struggled to make important financial decisions with poor quality data. While these insurance companies have amassed huge quantities of paid claim statistics, this data is of little use when trying to understand characteristics of the risks they insure due to a lack of meaningful detail.

Historically, the value of claims feedback to underwriting has been limited to “risk reports” prepared by adjusters to alert the company to condition issues and other potential problems. Since the adjuster is on site, it is more efficient to take a few extra minutes to fully evaluate the entire structure and gather risk characteristics that can help guide future underwriting decisions.

Information collection using modern technology provides instant, actionable information to the underwriter. Based on risk characteristics, the carrier can evaluate individual properties to ensure the proper amount of coverage (and premium). This process of obtaining a solid Insurance-to-Value (ITV) calculation also collects a wealth of data that can be used in predictive modeling when it is properly archived.

An ITV should consider any remodeling, additions or other improvements for determination of policy premium. The ITV should also verify accuracy of policy limits and adherence to coinsurance requirements. Observations recorded by the adjuster can also reveal risks associated with the property such as a vicious dog, a trampoline or a wood burning stove, etc. Furthermore, hazard characteristics such as terrorism exposure, distance to a fire hydrant, or proximity to a neighboring business with hazardous activities will be noted.

Other observations noted through the adjusting process during an on-site inspection are damage from previous events and pre-existing conditions. The overall quality of the structure can be recorded and archived to determine proper pricing or other business needs. What kind of roof is on the building? What is its damageability? What is the average cost of repairs should it sustain damage? Is age of the roofing material a factor? The answers to questions like this can be provided with the proper data stream.

Finally, collection and examination of loss data will help carriers study rating tiers and allow peril specific exposure mapping. Policy forms can be improved to fit business needs. Even reduction of fraud is capable through meticulous examination of data.

What’s in this for me? The Adjuster’s Perspective

Insurance carriers have always relied on skilled Independent Adjusters (I/As) to assist in the negotiation and settlement of claims. However, control of loss adjusting expenses often overshadows the benefits of employing I/As. The pendulum keeps swinging back and forth over whether a carrier is best served by staff adjusters or an independent staff. Invariably, the arguments hinge on service vs. cost.

The IA’s place in the carrier’s business is more securely established when an Independent Adjuster is able to provide detailed, meaningful information that allows the carrier to properly price and place a risk in addition to settling a claim. In fact, the savvy I/A will market this additional service to their carrier partner as a means of differentiating them from their competition. This is especially powerful when the I/A utilizes data analytics to ensure that the carrier is receiving high-value and high-quality data. In essence, the I/A can generate more business and bill more for their services by providing detailed data.

From the staff perspective, the collection of more granular and actionable information can change the dynamics within the entire organization. In some companies, the claims division is seen as a “necessary evil”. The age-old rivalry between underwriting and claims maintains that “those adjusters keep overpaying claims”. On the other hand, adjusters often believe that the risks they inspect haven’t been properly underwritten. Imagine the relationship that can exist when the underwriters and staff adjusters collaborate fully in the evaluation of the insured risks. Suddenly the claim adjuster has the power to positively impact the carrier’s bottom-line financial results by gathering and providing data that enables the underwriting team to more effectively place and price their risks. This shift can transform the entire claims division from a cost center into a profit center! As a result, a carrier’s claim staff can create more job security for themselves as they drive profitability within the claims division. As with the I/As, data analytics provides an important oversight to help ensure data quality

True Data Analytics provides the ability to study more than just claim totals and summaries of line items. It should capture all property claims data as well as information about the method in which the claim was settled. Analytics should provide trending information about adjuster behavior, price deviations, overhead and profit calculations, and other critical estimate components.

How do I make this happen?

The most effective way to gather granular data is to standardize the use of an estimating tool that electronically archives all data. Ideally, this estimator will use the same database as the underwriter in order to ensure valid comparisons. Further, handling all claims on the same estimator with the same database (regardless of whether the claims are adjusted by a carrier’s employee or an independent adjuster) helps ensure the widest possible data aggregation from which to complete the analysis.

Once the data is collected, this process requires the services of a skillful analyst to identify the risk characteristics that are critical for the underwriting process. A good analyst can help make solid recommendations that drive the business in the right direction. Conversely, even the best data in the hands of an untrained or unskilled staffer is often just meaningless gibberish.