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Adjusters Are Turning Pro With Help from Analytics

Ed McKinley April 2007

Motorists Insurance Group found some help with debris removal-literally and figuratively. As a result, the Columbus, Ohio-based life, auto, property and casualty company has prevented the loss of millions of dollars in overpaid claims while creating a confident, upbeat crew of adjusters.

It all began four years ago, when Motorists executives sat down for a presentation by Marshall & Swift/Boeckh (MSB), an MDA company with offices in New Berlin, Wis., and other North American cities. At the time, MSB had been providing Motorists with software for estimating property claims for about four years but was just launching an analytics consulting service to help carriers understand how claims are really paid.

In the presentation MSB parsed data from Motorists claim estimates and described how the insurer could achieve whopping savings, mainly by staunching leakage, says Teresa King, Motorists assistant vice president of claims. Impressed, the Motorists executives made a decision: "We said, 'We'd like you to study this a little more,'" says King.

So MSB reviewed data compiled from Motorists claims estimates and came up with ways of whittling down the bottom line by instituting best practices, says Anthony Hetchler, director of claims analytics for MSB Claims Analytics Group. Motorists picked three areas to concentrate on in the first year: debris removal, multiple minimum charges, and overhead and profit, says King.

"We picked the low hanging fruit-somewhere we could get our biggest bang for the buck," recalls King. Hanging lowest was debris removal. To sell the analytics adventure to top management, King, her people and MSB predicted they could cut debris removal costs alone by $1 million in the first two years.

Adjusters often use the category of debris removal as a catchall for added expenses on claims estimates, explains King. Before embarking upon the MSB analytics program, not many on the staff gave the category much thought. On a certain job, for example, they might allow for the rental cost of a 20-cubic-yard dumpster at $670 and just let it go at that.

Well, that job might not call for a rented dumpster, King says. If workers need to remove carpet, for example, they can put it by the curb in some municipalities and city workers haul it off for free.

Other times, a contractor can stash a job's small pile of refuse in the back of a pickup and drop it off at the landfill. Some of the smallest jobs hardly have any debris.

AN AWAKENING

MSB informed Motorists that debris removal accounted for 8% of the money the company paid in property claims, says Hetchler. Until then, Motorists didn't have the staffing or technological sophistication to figure out a percentage like that. "When they said 8%, I was like, 'Wow,' " recalls King.

That's when Motorists set a two-fold goal for better estimates of debris removal costs. The company vowed to reduce the category to an average of 4% on claims of more than $2,000, while holding the total for debris removal to an average of no more than $80 per claim on estimates of less than $2,000.

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