Teradata offers analytical solution for insurance claims cost management

Teradata, a division of NCR Corporation represented exclusively in SA by National Data Systems (NDS), has engineered Teradata Behavior Explorer, an insurance-specific business intelligence application, to focus on the claims area of property and casualty companies. When combined with the power of the Teradata data warehouse, it empowers insurance companies to reduce property and casualty claims costs by better assessing and improving claims management.

"In today`s fiercely competitive and dynamic insurance market, we believe Teradata Behavior Explorer will enable insurers to manage their claims costs more effectively than their competitors," says Simon O` Hagan, general manager of the Teradata Solutions Group at NDS. "We introduced this application to assist the industry in meeting the challenges of rising losses and to give insurers the necessary information to take actions to change that downward trend."

By running on the Teradata database engine, Teradata Behavior Explorer extends the power, speed and flexibility of enterprise data warehousing. It provides improved decision-making through its agility in analysing data on the insurance claims lifecycle, enabling business users to develop strategies to address areas of concern, and then, measure the effect of those strategies.

Teradata Behavior Explorer provides insurance companies a return on investment through increased customer-claim satisfaction and customer retention. It increases claim recoveries for subrogation, salvage and reinsurance. In addition, it improves performance and effectiveness of distribution and service channels, optimises service-level performance, productivity and transformation of paper-based reports to an automated decision-support environment.

"In the US, over 75% of the premium dollar is used to pay claims. To the extent that insurers can improve their claims costs management, they can improve their loss ratio. Since the loss ratio is the largest part of the combined ratio, Teradata Behavior Explorer can help improve it too," says O` Hagan.

According to O` Hagan, the ability to perform "dynamic measurement and management" of claims is critical today because a claims department can see its results instantly at the branch manager`s or adjuster`s desktop and take action immediately instead of waiting for month- or quarter-end reports or for IT department-generated reports.

Teradata Behavior Explorer helps manage customer interactions and assess the effectiveness and efficiency of claims management through two separate and interrelated modules:

• .         Product View provides analysis of product holdings by customer, product and distribution segments. It provides an overview of claims experience by internal profit centre, as well as by underwriting company. For example, an insurer may discover that it is experiencing an increase in the average automotive physical damage settlement for a particular industry. Underwriting may revise its guidelines to increase deductibles for that class or develop a loss-prevention program to reduce claims.

• .         Transaction View provides channel utilisation analysis to determine the effectiveness and productivity of its claims service administration. Each claim interaction - new claim reports, payments, closings, reserve changes and salvage recovery - is defined as an "event" to be used to profile the behaviour of both specific customers and larger customer segments. Claims can analyse the effectiveness of its branches and individual adjusters, service centres or service providers. They can then use this information to improve skills, reconfigure offices, reroute assignments, or negotiate better contracts with claims service providers.

Teradata has also developed a Claims Costs Business Impact Model to help customers assess the return on investment that can be achieved within their organization by reducing costs through improved claims management.

Access to the Behavior Explorer for claims application and the Teradata warehouse is provided through interactive analysis, standard reports and ad hoc queries. Behavior Explorer is now commercially available to the insurance industry and is backed by Teradata`s Professional and Worldwide Support Services.