copyright trurisk, llc 20061 overview presentation strategy—winning by changing the rules (patents...
TRANSCRIPT
Copyright TruRisk, LLC 2006 1
Overview Presentation
Strategy—Winning by Changing the Rules
(patents pending)
TruRisk, LLC
Copyright TruRisk, LLC 2006 2
Strategy—Winning by Changing the Rules
• Using better information (all medical claims)• Forecasting claim cost more accurately
utilizing proprietary Clinical/Statistical Models• Modifying the distribution system—review all
groups in medical plan or TPA then quote on groups with the greatest profit potential
• Change product attributes• Patent innovations—IP is key asset
Copyright TruRisk, LLC 2006 3
More Accurate Risk Assessment—All Lines, All Groups
CUSTOMIZEDCLINICAL
STRUCTURE
RAWDATA
INTEGRATEDPERSON ANDGROUP DATA
CLINICAL/STATISTICALANALYTICS
LTD
LIFE
CAPCOST™ and FIRST DOLLAR
SPEC & AGG
STD
DECISIONSUPPORT:
STOP LOSS
Data and Process Steps
UnderwritingProducts
Copyright TruRisk, LLC 2006 4
Paradigm Shift
• Evaluate risk and target favorable groups using Clinical/Statistical Models – Provide more accurate pricing of Disability and Life for
medical customers– Lower loss ratio and its variability– Cross-sell with first dollar or medical stop loss coverage
• Lower future risks—target high risk Disability and Life employees for absence management
Copyright TruRisk, LLC 2006 5
Evaluating Disability and Life Risk
• Medical claims and eligibility data required for cases to be underwritten
• Medical and Disability or Life claims do not need to be linked at the person or group level for model development
• Different Clinical/Statistical Models required for different insurance products
• Compare clinical risk to demographic and experience—calculate clinical/demographic ratio
Copyright TruRisk, LLC 2006 6
Clinical/Statistical Models
• Benefits of medical underwriting without the cost or intrusion—based on group’s encrypted medical claims, eligibility data and Rx (when required)
• Far greater range in the person-level estimate of incidence rates
• Direct estimate of future risk—forward looking
Copyright TruRisk, LLC 2006 7
What Will This Do for Me?
• Decrease loss ratios by using medical data to avoid groups with higher risk than indicated by demographics alone
• Increase close ratios on lower risk groups• Increase market share by cross-selling
Life and Disability to low risk groups with medical coverage—one stop shopping and medical management
Copyright TruRisk, LLC 2006 8
Potential Profit Impact LTD
• Based on one client’s data for cases under 1,000 lives– Avoiding the worst 5% of cases would result in increasing margins from
14% to 36%– Assume avoid ½ of bad groups, margin becomes 25% or 11% increase
• Additional profit produced by targeting low clinical risk groups– 21% groups have clinical/demo ratio<.80– 10% premium reduction gives clinical loss ratio=(.8/.9)*(current loss
ratio)=.89 or lower of current
• Retrospective analysis of groups with High Clinical/Demo Ratios had 55% greater Experience/Manual Ratio than Low Clinical/Demo Ratio groups, results from modest size validation study
• 10% reduction in loss ratio is target for LTD and Life
Copyright TruRisk, LLC 2006 9
Underwriting Summary Report
Clinical Model Output ReportBasic Case Info
Renewal Month
Case ID Case NameTotal Lives
Ratio: Clinical/ Demo
State SIC CodeGroup
with LTD
1 2 3 4 5 6 7 805 107355 ABC Co. 532 0.471 AB 00710 No 01 111533 GHI LTD 136 0.510 AB 00501 No
02 110900 JKL Co. 553 0.801 AB 00710 Yes11 109332 MNO Co. 457 0.802 AB 00710 No
01 108500 PQR Inc. 372 1.327 AB 00404 No 10 108237 XYZ.org 216 1.331 AB 00601 Yes
Copyright TruRisk, LLC 2006 10
Example Clinical Profile for Underwriting and Medical Management—Summary
LTD Morbidity Profile: Summary Level
10.5%
20.4%
27.5%
1.8%
24.6%
91.7%
9.8%
31.2%
5.3%
24.1%20.2%
1.8%
15.4%
68.5%
7.2%
19.0%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
Cancer Circulatory Digestive Liver Mental Musculoskeletal Nervous Trauma
Prevalence
Group ABC Average
Clinical areas w ith potentialfor excess disability
Copyright TruRisk, LLC 2006 11
Implementing the Strategy
• Short term– Implement clinical/statistical underwriting and
quantify loss ratio decrease for Life and Disability
• Longer term– Optimize marketing and underwriting tactics– Streamline and automate small/medium group
underwriting processes
Copyright TruRisk, LLC 2006 12
Require more information?
Contact:
847.295.2891