Client Risk Solutions Going beyond insurance

Transcription

1 Client Risk Solutions Going beyond insurance AIG Risk Management (AIGRM) Clients Select Custom Solutions Start

2 Introduction AIG Risk Management AIG Risk Management (AIGRM) is dedicated to bringing to its clients innovative and specialized services and coverages to help them best manage their insurance exposures. AIG Client Risk Solutions Client Risk Solutions (CRS) brings together industry leading analysis, expertise and innovation to offer a range of cutting edge, data driven solutions to help clients identify and reduce the risks they face now and in the future. Why a client should choose Client Risk Solutions support from AIGRM You deserve the best partner. AIGRM clients are by definition sophisticated risk managers, who need sophisticated tools, and they will get the best from AIG to help them reduce loss costs in their deductible layer and prepare for future risks. Because clients demand useful insights, not just reports. Our analytics shine a light on losses that are higher than they should be and our consultants highlight effective solutions that will lower AIGRM clients total cost of risk and deliver positive returns on investment for mitigation spending. Because costs won t come down by themselves. Spotting savings opportunities is one thing, producing savings is what matters. Our in-house risk experts and data scientists will customize a plan to reduce your losses and then provide execution support, wherever needed. Within this brochure we will highlight some of the select custom solutions CRS can offer AIGRM clients. 2

3 Advanced Analytics boosts the impact of our solutions at every stage. Exposure Mitigation Loss Prevention Claims Management Frequency Severity Fraud Legal Cost Lower Loss Costs Ergonomics consulting Security & terrorism prevention Enterprise risk management Health & safety risk management Wearable technology & devices Fleet risk management Crisis response & support Post-loss mitigation Product liability & defensibility Workers compensation fraud detection & mitigation Workers compensation legal panel review Workers compensation settlement strategy These are just some of the solutions available to you from AIGRM to help you save money. 3

4 Advanced Analytics Program Description Advanced Analytics & Loss Causation We identify and quantify risks in detail to support insurance or strategic risk management decisions, from detailed analysis of concentration of risk to solution prioritization to business case development. EXAMPLE 4

5 Advanced Analytics Example: Benchmarking and Loss Driver Inquiry Service provider uses analytics to achieve loss cost reductions. Payroll Amount ($M) Claim Frequency and Payroll Policy Year Payroll Client Benchmark Claim Frequency Fall, Slip, Trip Injury Strain or Exertion Struck or Injured By Motor Vehicle Striking Against or Stepping On Other % 14% 12% 14% % Cost 8% 3% 5% 6% % Claims 22% 22% 40% 42% A client in the business services industry wanted to confirm their suspicion that its losses were higher than they should be and then wanted specific ideas of how to improve. Analyses showed the client consistently underperformed their custom benchmark and that, had the client performed at benchmark over the past 5 years, they could have saved $19M. CRS analyzed specific loss drivers and found Fall, Slip or Trip Injury was the top cause, (mostly due to ladders) followed by Strain or Exertion. Together these accounted for 59% of claims and $1.7M annually. CRS then worked with the client to identify precise areas for improvement and to formulate an implementation plan that included ladder sensor technology to monitor risky behavior and customized safety videos from our RiskTool Advantage platform to change behavior. The client initially set risk reduction goals of 15%... and then surpassed that savings target in the first year. Loss cost reduction exceeded 15% target 5

6 Exposure Mitigation Program Description Ergonomics Consulting CRS risk consultants delve into frequent job-specific injuries and then propose a range of customized ergonomic solutions to address the root cause. Security and Terrorism Prevention CRS assists clients to pursue Department of Homeland Security liability protection against terrorism events under the SAFETY Act, beginning with a review of current mitigation strategies through to assistance with training and documentation. MORE Enterprise Risk Management Workshops with client executives to help identify and prioritize corporate level risks, discuss mitigation options and evaluate cost/benefit options. ERM risk modeling helps clients to model, simulate and assess the impact of and resilience to extreme events. 6

7 Exposure Mitigation Example: Ergonomics Consulting Food distributor targets sprain injury reduction through ergonomics training. Claim Distribution for Injury Type Strain / Sprain Concusion Puncture Rupture / Fracture Laceration Other % 9% % Loss % Loss 13% % Loss % Loss % Claims # % 46% 1% 79% 62% 55% 54% 66% 66% 15% 15% % Claims # % % Claims #-337 7% % Claims #-220 The majority of this food distributor s claims involved sprain and strain injuries. To improve their performance, the client asked CRS to explore Strain Sprain prevention, through ergonomic enhancements and manual materials handling training. CRS experts, including ergonomists, studied the root causes of numerous severe soft tissue injuries at several plants with the highest loss rates. NEXT CRS helped to develop and implement a plan focused on strain/sprain injury reduction, including enhanced training. Client targeted 10% frequency reduction across all business units. Actual results: all business units except one reduced frequency by more than 25%, for estimated direct savings $2.4M per year, and total savings, including indirect costs of loss avoided of $7.2M per year. Total savings of $7.2M per year 7

8 Exposure Mitigation Example: Security and Terrorism Prevention Global retailer aligns security resources with targeted risk of civil disruption in Mexico. Spatial-Temporal Densities of Violent Protest Activity in Mexico Client incurred looting losses at retail locations in Mexico and expressed concern about rising protests across the country. They asked for help to identify its locations that were most at risk for future damage. CRS examined recent looting and other incidents related to civil unrest and found several leading indicators among local economic, governance and demographic characteristics. CRS then compiled a database of those indicators in areas close to all of the retailer s locations in the country over many recent years. Among hundreds of locations, CRS identified the 0.8% most vulnerable to looting, using a multi-factor analysis to show where the constellation of leading indicators pointed toward civil unrest in the near future. This helped the client direct their security resources, in order to prevent similar future losses. Finally, CRS showed how these factors had changed over time and would likely evolve in the future. Less than 1% of locations identified most vulnerable to future damage 8

9 Frequency Program Description Health and Safety Risk Management We offer a range of interventions from the traditional to cutting edge, such as our Soft Tissue Injury Management (STIM) programs, employee screening, and ergonomics. Wearable Technology and Devices CRS experts can help clients reduce commonly occurring injuries through a variety of solutions, ranging from high tech, cloud connected, wearable devices to lower tech jointsupport technology. We will assist in designing, deploying and measuring the effectiveness of solutions. MORE Fleet Risk Management CRS Fleet experts partner with clients to reduce risk by enhancing safety management programs and consulting on the latest vehicle technologies allowing us to tailor solutions from design to implementation. 9

10 Frequency Example: Health & Safety Risk Management Security company targets soft tissue injury mitigation program to achieve substantial savings. Claim by Cause for select states 50% $150 $100 Claim Severity vs Benchmark for select states % Loss Time Claims 40% $120 30% $90 20% $60 10% $30 $25 0% Fall, Slip, or Trip Injury Strain or Injury By Struck or Injured By Other Miscellaneous $0 Average Loss ($K) Average Loss (5K) $75 $50 $0 A B C Others A US security company wanted to focus its loss mitigation efforts on the most expensive loss drivers but needed AIG s help to identify them. The Client s largest cause for claims, falls and strains, both led to frequent and relatively severe soft tissue injuries. Our analytics revealed which states the client should focus their soft tissue injury efforts to get the greatest return on their investment. A specialist vendor partner performed baseline diagnostics on pilot groups in the targeted locations. The client did not sustain a soft-tissue injury for over 12 months in the group that was tested; while the control group that was not tested saw 42% of their losses from soft-tissue injuries. The client has experienced 100 fewer soft tissue claims since the pilot began, yielding an estimated $2.8M in direct cost savings. NEXT Claim volume decrease yielded $2.8M in direct cost savings 10

11 Frequency Example: Health & Safety Risk Management Defense contractor tackles musculoskeletal disorder claims. # Claims Top Injuries by claim count and average cost 250 $500K 200 $400K 150 $300K 100 $ $100 0 $1K Strains/Sprain Rupture Disc Inflammation/Irritation Cumulative Trauma $ Average claim cost Company that deploys people to work overseas along with US Defense Department wanted to study and reduce their claim volume. CRS analyzed their claim and payroll history and found that strains and sprains accounted for 40% of claims and 22% of claim cost, most commonly caused by Falls and Slips and each injury lasted more than 6 months on average. CRS then proposed a soft tissue injury management program including preventive screening to mitigate Musculoskeletal Disorder claim frequency and severity and that could be deployed overseas. After one year of program implementation, the claim frequency decreased from 19.4/100 employees to 11.1/100 employees. This 43% frequency reduction resulted in $8.5M projected loss cost savings. NEXT 43% fewer musculoskeletal disorder claims Estimated savings $8.5M 11

12 Frequency Example: Wearable Technology and Devices Entertainment company reduces performer injury through targeted use of compression sleeves. Strain/Sprain Claims by Employee Type Strain/Sprain claims for by Venue % % Venue A Venue B Venue C Venue D The client employed thousands of performance athletes who generated most of the claims, and they wanted to experiment with new technology that could prevent these injuries without getting in the way of their very physically demanding jobs. # Claims CRS analyzed their claims and found that 2/3 of injuries and loss costs were due to strains or sprains. In addition, certain kinds of employees in certain roles and venues were disproportionately experiencing these soft tissue injuries. In collaboration with the client s risk management, safety and operations teams, CRS then launched pilots with multiple groups of particularly vulnerable employees, where employees wore compression sleeves on appropriate limbs and joints during their shifts. The pilots resulted in significant reductions in reports of pain and discomfort, and a decrease of total incurred costs for strains and sprains that ranged between 22 to 65% depending on the performance role and venue. Average Loss (5K) NEXT Up to 65% reduction in loss costs from strains in pilot 12

13 Frequency Example: Wearable Technology and Devices Logistics Company reduces strains and sprains in warehouse operations. Payroll and Claim Frequency by Job Warehouse Strain/Sprain Key Words Percentage of Injuries - Top 3 Warehouses Payroll Amount ($M) $ $ $ $0-0.5 Driver Office Warehouse Mechanic Claim Frequency Average Losses: > $31K $6K $18K $18K $31K <$6K 27% 14% 5% 55% Strain/Sprain Puncture 13% 23% 13% 8% 13% 8% 60% 62% A B C Contusion All Other Laceration A logistics client was concerned about their high frequency of claims, particularly among warehouse employees. CRS analysis confirmed that strains and sprains caused the majority of warehouse claims and further revealed that lifting boxes was the most frequent driver of the severe claims. The client then asked CRS to conduct a pilot to reduce loss. Analysis indicated one warehouse ( C ) with a high rate of strain and sprain claims should be the employee population evaluated for study. For two months, a group of employees volunteered each to wear an inclinometer to measure their posture, specifically the angle of the back to the floor and the weight of the item carried. Some employees also wore biofeedback devices. CRS observed a 60% reduction in poor posture among device wearers with bio-feedback, relative to a control group (i.e., no feedback). Nearly a year later, that warehouse has had a 20% decline in the frequency of strains and sprains. NEXT 20% reduction in strain/ sprain claims 13

14 Frequency Example: Fleet Risk Management Communications company delivers enhanced training to drivers with a history of incidents. Annualized Losses ($M) # Claims (K) $4.3M $6.9M $0.8M $3.0M 5 $500K 4 $400K 3 $300K 2 $200 1 $100 0 $1K Sideswipe Accident Rear-ended Accidents BackingvOr Rolling Back Collision $ Average claim cost Sideswipe & Rearend Accidents accounted for annual losses of $11.2M (65% of total) A communications client with a dedicated fleet of thousands of vehicles sought to understand and then address the core issues behind its growing auto claim book. CRS analyzed their claims and fleet history and found that 65% of their losses stemmed from two specific causes, sideswipes and rear-end collisions. CRS also determined that claims tended to occur in dense population centers, with lots of traffic and tight city streets. The client opted for enhanced training. CRS worked with a specialist vendor to design a full-day classroom and behind-the-wheel seminar that focused on root causes of those common accidents and included lessons on distracted driving. Trainees were selected for the pilot, based on having recent, multiple incidents. It is too early to tell the long term impact on their claims performance, but upon pilot completion, trainees, managers and union leaders all expressed high satisfaction with the program. Custom Training program targets root causes of 65% of accidents 14

15 Severity Program Description Crisis Response & Support We help clients prepare to navigate a crisis and minimize disruption, first by assessing the likelihood of future terrorist events to help prioritize resource deployment. Training ranges from the C-Suite to the shop-floor, including classroom training to active table top drills to help clients with planning, prevention and response. Post-Loss Mitigation CRS will analyze those events that occur after losses are sustained and drive severity, for example, by increasing the likelihood of litigation. We then help launch tailored interventions and measure their success. MORE Product Liability and Defensibility Support in identifying clients product liability exposures and preparing for risks they may face today and tomorrow. 15

16 Severity Example: Crisis Response & Support Global luxury cinema client incorporates lessons learned from 2016 bombings into event security and incident response plans. On September 17 19, 2016 three bombs exploded in Manhattan leaving 31 people wounded. A client in the entertainment industry, who was planning a major public event in New York City at the time, asked CRS to help them understand and prepare for heightened security risks. CRS examined all previous security incidents in the neighborhood where the event was planned, reviewed the client s existing procedures, and coordinated onsite security premises inspections with managers. CRS introduced the client to a crisis communications and management firm and asked them to share best practices on how to act in the event of public security incidents; and finally CRS conducted Q&A sessions with managers and private security agents to develop scenario plans. The client implemented several changes to policies and procedures outlined by CRS to enhance security and emergency response, and the event went off without incident. NEXT No incidents; Better preparation 16

17 Severity Example: Post Loss Mitigation Major employer introduces claimant advocacy program after analysis reveals the true cost of injured employee frustration. # Indemnity Claims Litigated Claims Non-Litigated Claims Average Cost 15, K 12,000 80K 9,000 60K 6,000 40K 3,000 20K 69% 0 5K Frustrated, Upset, etc. Other 47% Average Incured Claim Cost A staffing client approached CRS with concerns over its high Workers Comp litigation rate. Prior research also indicated that after being injured some claimants expressed frustration at how they were treated. CRS conducted a deep textual analysis in adjuster notes and identified claims with indications of claimant frustration. This subset had a 70% litigation rate and cost 4x more than claims with no indication of frustration. NEXT Armed with this data, the client s CFO authorized a Claimant Advocacy pilot program, where new claimants were randomly assigned to receive attention shortly after injury and throughout recovery. CRS evaluated the results versus a control group and found a 32% reduction in litigation rate in the first 3 months of the claim lifecycle for the advocacy group. Upon conclusion, the client made the program permanent for all claimants. 32% reduction in litigation rate 17

18 Severity Example: Post Loss Mitigation Client accelerates time to first medical intervention, beginning in targeted hotspots, to reduce litigation rate and loss costs. # of Lost Time Claims Cost and Litigation Rate by Time-to-FMI $50,000 4,000 $40,000 3,000 32% Potential savings of $5.1M if Time-to- $30,000 2,000 FMI shortened to <30 days $20,000 1,000 34% 41% 45% 47% 70% $10,000 - $0 Days to FMI* >> 0-1 Day Days Days Days Days Days + $ CPI-adjusted Avg. Claim Cost # Litigated Time-lost Claims # Non-Litigated Time-lost Claims $ Ave. Claim Cost for Time-lost Claims CRS was asked to help a major retailer reduce claim severity in its Workers Comp program. CRS found wide variation in time-to-first medical intervention (FMI). Further investigation revealed that as time-to-fmi increased, the likelihood of litigation increased from 32% to 70%, and severity also increased from $30K to $40K on average. NEXT CRS analyses further uncovered that when time-to-fmi exceeds 30 days, claim cost is 26% higher and portion of claims in litigation is 60% higher. The potential savings that could be achieved, if the client could reduce the time-to- FMI lag below 30 days across the entire portfolio was estimated to exceed $5M. Moreover, the client experienced wide geographic differences, with the highest concentration of time-to-fmi exceeding 30 days in several distinct geographic areas. Our client then updated its policies and focused on changes in these hotspots. Identified savings opportunity of $5M 18

19 Severity Example: Product Liability and Defensibility Equipment manufacturer seeks proactive solutions to mitigate key drivers of product liability claims Component Claim Distribution by Brand and Component Brand A Brand B Brand C 9% 12% 9% 3% 24% 3% 4% 4% 6% 38% 5% 7% 5% 4% 3% 5% 6% 10% 8% 25% 11% 9% 15% 11% 11% 20% 25% This original equipment manufacturer requested product liability insights, based on their large volume of their product liability claim data. CRS analysts aggregated and mined claims data across brands to compare the brand of company A against the brands of company B and C. Deep dives revealed comparable component parts from each brand that sparked claims. Specifically, CRS identified that two individual components generated roughly 50% of all claims across brands. Even deeper analysis revealed varying subrogation rates against the brands suppliers for those components revealing major opportunities to recover claims costs from the responsible suppliers. With these insights, the company had the tools to enhance their supplier subrogation process and take an overall harder look at their supply chain practices. Identified root cause of 50% of PL claims and subrogation options 19

20 Fraud Detection & Mitigation Program Description Fraud Detection & Mitigation Our predictive models and antifraud technology effectively unearth suspicious Work Comp claim activity. Experienced investigators then help clients root out and prevent further potential fraud from claimants, providers and producers. MORE 20

21 Fraud Detection & Mitigation Example: WC Fraud Detection & Mitigation Hotel chain aims to reduce loss costs through sophisticated identification and investigation of potentially fraudulent claims % 11% 7% Preliminary indications of suspicion broken out by occupation: client vs industry 11% 3% 5% 20% 4% 5% 10% 11% 55% 47% Client Housekeeper/Laundry Restaurant Staff, Other Host/Server/Bartender Maintenance/Engineering Hotel Staff, Other Banquet/Catering Baker/Chef/Cook All Other Occupations This hotel chain felt it was spending money on a substantial portion of claims that were fraudulent or at least exaggerated, possibly in collusion with certain providers. While fraud detection and investigation is already a standard part of AIG s Claims Servicing, it has not been applied to clients that choose to work with Third Party Administrators (TPA), until now. CRS is piloting a new unbundled approach to fraud mitigation, beginning with a deep analysis of the work comp claims. Compared to Industry, the client shows a lower percentage of suspicious claims in Housekeeper/Laundry (47% vs 55%) and a higher percentage for Host/Server/Bartender (11% vs 2%). 8% of the sample analyzed have potentially suspicious elements and are being investigated. Another 15% show early indications of misrepresentation and are being monitored. AIG s experience on its proprietary claims suggests that the client could eventually yield 2-3% in savings from denying these suspicious claims. Potential savings of 2% to 3% on open claim reserves 21

22 Legal Cost Program Description WC Legal Panel Review CRS analyzes claim performance data from the legal defense firms that clients employ in their own defense. We develop comparative performance indicators to help clients select the most cost-effective firms for future claims, on the basis of their performance. WC Settlement Strategy AIG has developed a patentpending model to mitigate Workers Compensation loss experience deterioration by identifying select claims for settlement (compromise and release agreement). The opportunity for early settlement allows for substantial savings for both the insurer and the client and may prevent the claimant from receiving unnecessary medical care. MORE 22

23 Legal Cost Example: WC Legal Panel Review Client re-evaluates its defense counsel selection decisions. Litigation by Unit Lost Time Claims 600 $120K 500 $100K 400 $80K 300 $60K 200 $40K 100 $20K % 10.4% 10.5% 10.4% 8.5% $0K Unit 1 Unit 2 Unit 3 Unit 4 Unit 5 Average Loss (5K) Litigated Claims Non-Litigated Claims Litigated Avg. Cost Non-Litigated Avg. Cost A client and major employer expressed concern about the total cost of risk in its casualty claim portfolio. CRS analyzed claims and among many findings calculated annual costs of $2.8M from litigated Workers Comp claims per year. Further, CRS found relatively consistent litigation rate and expense across business units and job functions, and that litigated claims cost as much as 5x non-litigated claims. Client asked CRS for help in evaluating the performance of the firms it had hired to defend itself to complement ongoing efforts to reduce the underlying causes of claims. CRS collaborated with the client to determine the criteria for evaluation of legal counsel and developed several key performance indicators (KPI s), and then analyzed the firms they had hired vs. other firms that AIG had hired in the same markets along those KPI s, to enable the client to make better hiring decisions. Targeted help to reduce $2.8M in annual litigated claim costs 23

24 For more information Visit us at American International Group, Inc. (AIG) is a leading global insurance organization. Founded in 1919, today AIG member companies provide a wide range of property casualty insurance, life insurance, retirement products, and other financial services to customers in more than 80 countries and jurisdictions. These diverse offerings include products and services that help businesses and individuals protect their assets, manage risks and provide for retirement security. AIG common stock is listed on the New York Stock Exchange and the Tokyo Stock Exchange. Additional information about AIG can be found at YouTube: LinkedIn: These references with additional information about AIG have been provided as a convenience, and the information contained on such websites is not incorporated by reference into this material. AIG is the marketing name for the worldwide property-casualty, life and retirement, and general insurance operations of American International Group, Inc. For additional information, please visit our website at All products and services are written or provided by subsidiaries or affiliates of American International Group, Inc. Products or services may not be available in all countries and jurisdictions, and coverage is subject to actual policy language. Non-insurance products and services may be provided by independent third parties. Certain property-casualty coverages may be provided by a surplus lines insurer. Surplus lines insurers do not generally participate in state guaranty funds, and insureds are therefore not protected by such funds. American International Group, Inc. All rights reserved. USAL