“Digital transformation” in P&C insurance means applying computer tools to improve performance. Hundreds of new applications have been introduced, focused mostly on growing sales and improving customer experience, particularly in personal lines. A few have made inroads into the claims department, like letting insureds upload photos and text with adjusters.
Claims that turn into lawsuits are harder. The data does not arrive in a useful native format or fit into neat columns and rows. It arrives in bits and pieces from defense counsel, often in emails with scanned attachments. The work of claim professionals making notes and saving documents in the claim management system is time consuming and can be inconsistent.
Yet, lawsuits are often the most expensive losses. Paid indemnity and legal expense are high. Decisions in litigated claims can have out-sized impacts on total loss costs and invite scrutiny. But given the state of technology used in litigated claims, even the best professionals are unable to capture all the data — and applied judgment — that goes into sound decision-making.
Several major carriers that have tried to operationalize their historic litigated claims data, with mixed results. The claim notes and documents turned out to be inadequate to make much use of them due to inconsistent input effort. This goes back to the problem with using database methods: text data does not fit easily into columns and rows.
The one area where P&C insurers have widely applied technology in litigated claims is to manage legal spend. Today there are dozens of e-billing vendors which track, manage and enforce rules designed to reign in legal spending. Insurers use these products to reduce leakage, reduce administrative processing burdens, and make evidence-based decisions about who to hire to defend cases.
For most carriers, only highly experienced claims professionals handle litigated claims. Companies depend on this critical talent to pursue favorable outcomes. These professionals have a great deal of claims knowledge from experience, as do the attorneys hired to defend the lawsuits. But, for the most part, an explicit representation of their knowledge and insight that never makes it into the claim file. Unlike billing data, which is routinely captured by carriers, legal work data is not.
But it is the legal work — and the data embedded in that work — that determines case outcomes. All this digital data could be operationalized with machine learning and natural language processing to speed up claim resolution and reduce claim costs.
Artificial intelligence has made great strides in the last few years. Language models have been developed that can translate dozens of languages and even write stories. But to apply machine learning and language models to improve outcomes in litigated claims, the legal data from cases must first be captured and analyzed.
ClaimEdge is a highly secure collaboration solution that helps attorneys and litigation managers communicate more effectively, make better decisions, reduce costs, and improve claim outcomes. For more information on how to capture and analyze your litigation data with our secure cloud-based digital workroom that helps legal and claims professionals collaborate on your toughest claims, please visit our website at https://www.claimedge.co.
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