Predictive Analytics Is Now Opioid Buzzword Replacement

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Predictive Analytics Replaces Opioid Buzzword

Predictive Analytics for workers compensation claims adjusting still has not proven itself as a cost saver.   Please note that I am referring to workers compensation only.   

picture wizard predictive analytics crystal ball
Public License – Wikimedia-The Wizard

Predictive analytics for other lines of casualty insurance such as auto and property damage has shown some promise over the years.   However, workers compensation adjusting and reserve analytics have not reached the point as a viable option. 

One of my longtime workers comp compatriots – Mark Walls of Safety National went as far as calling analytics a myth.    That is very strong language, but I cannot find one analytics package, app, program, or cloud-based analytics that would allow me to challenge Mr. Walls’s assessment. 

Mark and I agree down the line on many facets of workers compensation.  With my actuarial background, I often give any type of statistics a wide berth to enhance the accuracy of workers compensation benefit management. 

The bottom line is that I am still waiting for a great analytics package outside of an Excel(r) spreadsheet that would make me feel very comfortable with professing that “workers compensation claim and reserving analytics have arrived.”    I still cannot even begin to utter that phrase.   Why?  

Two different random variables enter into the equation.  Every injured employee has a different “healing window” of time to physically and mentally recover from an injury and return to the workplace.   The other variable is the mental healing capacity of the injured worker.   No two people look at a fractured arm in a cast with the same outlook.    

So let us look at what I am talking about in a formula for the number geeks such as myself:

Known and predictable statistic (1) * known and predictable statistic (2) * known and predictable statistic (3) = accurate predictive analytic 

but 

Known and predictable statistic (1) * known and predictable statistic (2) * known and predictable statistic (3) *  physical healing random variable * mental healing random variable = shot in the dark at best 

Man With Predictive Analytics Neck Injured
Extended License Stockunlimited.com neck injury

As I have said, and Mark Walls says in his article – Show me the analytic.  I will do an article at length on any software, etc.  if I can be presented with one package that can predict claim outcomes.   

That is why Reserving is an Art, not just a formulaic contrivance of a few numbers on a spreadsheet.  As Mark mentioned in his article, good experienced adjusters still survive as the best analytic tool for foretelling how a claim will turn out.  Hold on, though, please see the word good in the prior sentence.   

Unfortunately, not all experienced adjusters are great at reserving.   Then again, they can be the best claims handlers on earth using one technique.   It is called The Golden Rule.   

As with my search for a decent Workers Compensation app, I invite any person or company to see me a claims predictive analytics package that can predict workers compensation claims outcomes.  

©J&L Risk Management Inc Copyright Notice

 

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2 Responses

  1. So interesting because a reasonable number of companies claim they effectively do this. I’ve had my doubts as well, and feel that eyeballing a claim, assessing the type of injury sustained, and knowing a little bit about the claimant (how far is the claimant from work; does this claimant have multiple claims; is the claimant nearing retirement) is about as effective as any program could ever be.

  2. Pamela, I agree that many companies claim they can do very accurate predictive analytics. A few markers exist that can point to possible outcomes. However, the randomness of injury healing cannot be placed into a formula. Thanks for responding.

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James Moore

Raleigh, NC, United States

About The Author...

James founded a Workers’ Compensation consulting firm, J&L Risk Mgmt Consultants, Inc. in 1996. J&L’s mission is to reduce our clients’ Workers Compensation premiums by using time-tested techniques. J&L’s claims, premium, reserve and Experience Mod reviews have saved employers over $9.8 million in earned premiums over the last three years. J&L has saved numerous companies from bankruptcy proceedings as a result of insurance overpayments.

James has over 27 years of experience in insurance claims, audit, and underwriting, specializing in Workers’ Compensation. He has supervised, and managed the administration of Workers’ Compensation claims, and underwriting in over 45 states. His professional experience includes being the Director of Risk Management for the North Carolina School Boards Association. He created a very successful Workers’ Compensation Injury Rehabilitation Unit for school personnel.

James’s educational background, which centered on computer technology, culminated in earning a Masters of Business Administration (MBA); an Associate in Claims designation (AIC); and an Associate in Risk Management designation (ARM). He is a Chartered Financial Consultant (ChFC) and a licensed financial advisor. The NC Department of Insurance has certified him as an insurance instructor. He also possesses a Bachelors’ Degree in Actuarial Science.

LexisNexis has twice recognized his blog as one of the Top 25 Blogs on Workers’ Compensation. J&L has been listed in AM Best’s Preferred Providers Directory for Insurance Experts – Workers Compensation for over eight years. He recently won the prestigious Baucom Shine Lifetime Achievement Award for his volunteer contributions to the area of risk management and safety. James was recently named as an instructor for the prestigious Insurance Academy.

James is on the Board of Directors and Treasurer of the North Carolina Mid-State Safety Council. He has published two manuals on Workers’ Compensation and three different claims processing manuals. He has also written and has been quoted in numerous articles on reducing Workers’ Compensation costs for public and private employers. James publishes a weekly newsletter with 7,000 readers.

He currently possess press credentials and am invited to various national Workers Compensation conferences as a reporter.

James’s articles or interviews on Workers’ Compensation have appeared in the following publications or websites:

  • Risk and Insurance Management Society (RIMS)
  • Entrepreneur Magazine
  • Bloomberg Business News
  • WorkCompCentral.com
  • Claims Magazine
  • Risk & Insurance Magazine
  • Insurance Journal
  • Workers Compensation.com
  • LinkedIn, Twitter, Facebook and other social media sites
  • Various trade publications

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