Claims Analytics
ICBC Advanced Analytics
May 2015
Overview
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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.
Limits / Deductibles
Competitive Optional
Insurance Market
Coverages
3rd Party Liability
Underinsured Motorist
Accident Benefits
Basic Insurance Monopoly
3
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
5
Profit is a function of price and costs
Increase policies in force
Reduce fixed costs
𝑝𝑟𝑜𝑓𝑖𝑡 = ∑𝑁
𝑖=1 𝑝𝑖 − 𝑐𝑖 − 𝐹
Price accurately
Manage claim costs
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Loss Cost
Loss cost are increasing
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Accident Year
Actual (Current Application)
PY 2013 Projection (Current Application)
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Legal Conversion Rate
More claimants are seeking lawyers
2004
2006
2008
2010
2012
2014
Calendar Year
Actual
Long Term Trend (2004-2011)
Forecast
8
Improve value and service for
customers
Managing increasing BI claims costs.
Improve the quality, consistency and
timeliness of claims handling.
Strategic Decision Support
Risk Assessment
(Suggested Reserves)
Analyze
Maintain financial stability
Tactical Decision Support
Identify Risk Factors
Understand Normal
Claim Behaviour
Measure Case
Complexity
Fraud Analytics
Identify High Risk
Providers
Review and Revise
Implement
Benefit
ICBC’s claims analytics framework
Litigation Management
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Fraud analytics to detect suspicious claims
Legal
All Claims
Refer to legal
for assistance
SIU
ADJUSTER
Potential
Fraudulent
Claims
Fraud suspected
and referred
Assign
and
Investigate
ADJUSTER
Adjuster determines:
• How facts are used
• Don’t pay claim
• Reduce claim payout
Facts found
Fraud not suspected
Case not assigned
Fraud not pursued
NO ACTION
NO ACTION
NO ACTION
DETERRENCE
Fraud Detection Tools
Fraud Case Management
Assessing outside counsel effectiveness
is critical
Who should defend the case?
Defense counsel
choices
Claimant
Adjustor
Plaintiff
Counsel
Ms. Fleming, Esq.
Mr. Menard, Esq.
Claims legal
services
…
Mr. Vavrik, Esq.
Claim
traits
Mr. Yun, Esq.
How to evaluate the outcome and
the defense counsel performance?
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Assessing risk is at the core
Uncertain
Certain
Low risk
High risk
Minor injury
Creeping catastrophic
injury claim
Very low
risk
Costly but
not risky
Glass repair
Catastrophic injury
Low
High
Future Cost or Impact
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