Ai solution for insurance claims reserve estimation
Artificial intelligence helps insurance companies become More profitable by more accurately managing reserves
Insurance companies have traditionally been averse to adopting new technologies. This has seen a change in the past few years with increased competition and shrinking margins putting pressure on executives to adapt. One way insurance companies are improving profits and reducing risk is through Artificial Intelligence. Many claims departments have adopted AI to identify fraud, but Artificial Intelligence (AI) can be used in many ways to improve profitability.
Reserve management is another area AI can provide immense benefit. Establishing proper case reserves in insurance is a fundamental obligation of the claims department. The adequacy, redundancy, and deficiency of these reserves can bloat a loss ratio, meaning that the loss ratio is insufficient. Both can be injurious to an insurance company's profitability.
Solve Business Problems with Watson Technology
Within an insurance company, reserve management is the obligation of both the claims adjusters and the management staff. Case reserves are usually estimated based on the judgment and experience of the adjuster. For example, property damage reserves are characteristically based on a fixed amount, such as a repair appraisal or some other documentation that supports the amount of the damage.
The problem is that it's based on the experience and judgment of the claims adjuster, which can vary a great deal. Some companies have implemented analytics systems to help ball park a claim, but the information that makes the claim amount vary wildly is not part of the data a traditional analytics system is capable of evaluating. The mention of a leg injury buried in the police report has a statistical probability of being significant to the claim amount, but analytics systems cannot read a police report.
An IBM business partner, the Dayhuff Group has bulit an artificial intelligence solution to help bring consistency to reserve management. ReserveAI built on IBM's Watson AI can read through all of the documentation and decipher "arm injury" from "arm rest" to identify the items that cause claims to explode. ReserveAI give claims managment the ability to consistently and systematically evaluate claims reserves with the ability to learn as it works.
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ReserveAI learns from your claims settlement past, building its library of actual claims payments from your payment history. It then uses that knowledge to identify like characteristics of a new claim to estimate the amount of reserve to apply. This is tantamount to having a highly trained adjuster focused on reserve management with all of the knowledge of every claim every processed by your company.
ReserveAI will make your reserve management more accurate, less time consuming, more automated and less subjective. Reach out to the Dayhuff Group today to see a demo.