Liberty Mutual Takes Aim at High-Cost Comp Claims

The company updated an earlier predictive model by analyzing more than 825,000 lost-time claims and 140 million individual medical billing transactions.

Liberty Mutual announced the launch of a new predictive model to quickly and accurately identify high-cost workers' compensation claims. Doing this will overcome a top challenge facing workers' compensation brokers, agents, and buyers, the company said. Some high-cost claims are obvious from the start, such as a roofer who falls and becomes paralyzed, but most of them emerge over time.

Liberty Mutual had developed one of the industry's first comp predictive models in 2004 to pinpoint slow-emerging claims in response to soaring medical costs. "Today, our next-generation predictive model works with significantly more data, enables more sophisticated multivariate analysis, incorporates Red and Yellow flags, and supports better decision-making," said George Neale, general manager for claims at Liberty Mutual's Commercial Markets strategic business unit. "As early as claim intake, we now have the ability to identify claims with the potential to be high cost. In addition, we continuously assess the risk of escalation of our entire inventory through several modeling stages. Arming our claim handlers with this information gives us a unique opportunity to apply strategies and expert resources at a point in time where they maximize our ability to achieve the best possible outcome for injured workers and our policyholders."

The company said it analyzed its comp claims and medical billing database, which is the largest in the industry, to find highly predictive variables and "understand the interplay of these in order to identify claims whose costs were likely to escalate." In all, it evaluated more than 825,000 lost-time claims and 140 million individual medical billing transactions, then ran more than 200,000 lost-time claims through the updated model to validate its accuracy.

"Capturing more data and analyzing it carefully is important. But to be truly effective in lowering claim costs and improving outcomes, the model must give claim professionals more insight more quickly into how a claim is developing so that they can take action to improve its outcome," the company explained, adding that the new model does this through:

  • an Early Alert tool that flags potential high-cost claims and those at risk for escalation
  • a Medical Referral tool triggering referrals to specialized medical resources
  • a Dashboard presenting relevant claims information, including flags to indicate importance

"The next generation predictive model is the latest addition to Liberty Mutual's VantageComp, our integrated approach to claims management," Neale said. "This approach seamlessly blends technology, data analytics, predictive modeling, and superior talent to better manage policyholders' total workers compensation claim costs. It enables us to close workers' compensation claims faster and to produce lower Average Paid Costs per Claim than our competitors, according to data from A.M. Best."

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