Claims Analytics

ICBC Advanced AnalyticsMay 2015

2

Overview

• Auto insurance market in British Columbia• ICBC’s mandate• Limits to pricing segmentation• Increasing claims costs• What kind of claims analytics

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Auto insurance market in B.C.

3rd Party Liability

Accident Benefits

Underinsured Motorist

Coverages

Limits / Deductibles

Basic Insurance Monopoly

Competitive Optional Insurance Market

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ICBC’s mandate

Our business is: Accessible and competitive auto insurance for all British Columbians. There are five core concepts included in this mandate:• Everyone in B.C. has access to insurance;• Our products and services are designed to have wide

consumer appeal;• Insurance rates are stable;• Our road safety efforts contribute to reduced crashes and

loss; • We provide driver and vehicle licensing and registration

services.

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Limits of pricing segmentation

3.(1).d - “subject to subsection (2) of this section, ensure that universal compulsory automobile insurance rates are not based on age, gender or marital status;”

– B.C. Reg. 307/2004 Special Direction IC2 to the British Columbia Utilities Commission

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Profit is a function of price and costs

𝑝𝑟𝑜𝑓𝑖𝑡=∑𝑖=1𝑁 (𝑝𝑖−𝑐𝑖 )−𝐹

Increase policies in force

Price accurately

Manage claim costs

Reduce fixed costs

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Loss cost are increasing

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Actual (Current Application) PY 2013 Projection (Current Application)

Accident Year

Lo

ss C

ost

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More claimants are seeking lawyers

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Actual Long Term Trend (2004-2011)Forecast

Calendar Year

Legal C

onvers

ion R

ate

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Risk Assessment(Suggested Reserves) Fraud Analytics

Litigation Management

Understand Normal Claim Behaviour

Measure Case Complexity

Identify Risk Factors

Improve value and service for customersImprove the quality, consistency and timeliness of claims handling.

Maintain financial stabilityManaging increasing BI claims costs.

ICBC’s claims analytics framework

Strategic Decision Support

Identify High Risk Providers

Tactical Decision Support

Ana

lyze

Impl

emen

tB

enef

itR

eview and

Revise

Fraud analytics to detect suspicious claimsA

ll C

laim

s

Potential Fraudulent

Claims

DETERRENCE

ADJUSTER

Fraud not suspected

NO ACTION

Fraud suspectedand referred

SIUAssign andInvestigate

Case not assigned

NO ACTION

Facts found

ADJUSTER

Fraud not pursued

NO ACTION

Adjuster determines:• How facts are used• Don’t pay claim• Reduce claim payout

Legal Refer to legal for assistance

Fraud Detection Tools Fraud Case Management

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Assessing outside counsel effectiveness is critical

Claimant

Plaintiff Counsel

Adjustor

Claims legal services

Mr. Vavrik, Esq.

Mr. Yun, Esq.

Mr. Menard, Esq.

Ms. Fleming, Esq.

Claimtraits

Who should defend the case? Defense counsel choices

…

How to evaluate the outcome and the defense counsel performance?

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Assessing risk is at the core

Uncertain

Certain

Future Cost or Impact

Low High

Very low risk

Costly but not risky

Low risk High risk

Creeping catastrophic injury claim

Catastrophic injuryGlass repair

Minor injury