" class="no-js "lang="en-US"> EXCLUSIVE: "A Job Well Done" - Tom Warden, CLARA Analytics; John Swigart, Pie Insurance and Reagan Pufall, Omaha National in 'The Insurtech Magazine'
Saturday, December 10, 2022

EXCLUSIVE: “A Job Well Done” – Tom Warden, CLARA Analytics; John Swigart, Pie Insurance and Reagan Pufall, Omaha National in ‘The Insurtech Magazine’

Employment-based insurance is the most common private health coverage in the United States. And it’s where tech is proving key to bringing down premiums and improving benefits

In the US, healthcare is a divisive issue. From COVID-19 to the recent Roe v Wade ruling, which overturned universal access to abortion, those who can least afford medical assistance – often those who most need it – are priced out. For the majority of people in the States who have it, their healthcare provision is tied to their occupation.

Any accident, injury, or illness which could result in time off, is usually covered by workers’ compensation insurance, a commercial product provided by employers. And considering that there are 2.7 million labourers and material movers, 968,760 construction workers, 1.16 million agricultural workers and 4.2 million registered nurses, all in physically demanding jobs that put them at risk of illness and injury every day, that’s a big bill.

For 49 per cent of the US population, workers’ compensation insurance is their only access to sponsored healthcare. It covers medical costs, ongoing care needs like physical therapy and funeral cover for employees who suffer accident, illness or fatality related to their work. And that protection was hard won. According to insurer The Hartford, it took 37 years for all states to pass laws putting obligations o employers to carry workers’ compensation, with Wisconsin being the first in 1911, and Mississippi the last in 1948.

Many governments even set up their own funds to enable companies to purchase workers’ compensation directly from the state. Only in Texas is this insurance still not compulsory.

“The concept of ‘delivery’ in workers’ compensation insurance is complex in that the policyholder (business) and the claimant (employee) have a multi-faceted

relationship,” says Tom Warden, chief insurance and science officer at insurance AI-as-a-service provider CLARA Analytics.

“Businesses want their employees to return to work quickly, premiums to be low and litigated claims to be minimal. Employees want to get and stay healthy. They are mostly concerned about the quality of care they receive. How they are treated throughout the claim process has a significant impact on their attitude toward their employer and their desire to return to working for them. Claim adjusters must navigate the injured worker through this landscape full of obstacles to achieve a resolution that is viewed as equitable by all parties.”

CLARA offers a suite of products to manage and monitor risk and identify the services insurers need for a range of different claims. Its systems include CLARA Triage, Litigation and Treatment, to name a few.

“CLARA Litigation helps carriers and self-insureds reduce claims costs by enabling the adjuster to act quickly and proactively with the injured worker when events occur that, left unaddressed, increase the likelihood that the worker will call an attorney to represent them,” Warden explains.

“CLARA Treatment improves workers’ compensation by driving better outcomes for all parties: injured worker, insured business and insurance carrier. Our data shows when high-scoring physicians and clinics are used, back-to-work happens sooner, employers are less disrupted, the claims costs affecting their premiums are reduced and insurance carriers operate more efficiently and effectively.”

“We are a highly sophisticated tech company, but tech needs to support that [client] relationship, not replace it”

Reagan Pufall, Omaha National

Warden highlights two important metrics that technology sets out to address, namely claim-handling time – can take 12-to-18 months to reach a settlement, according to John Foy and Associates – and costs. The cost per head to businesses of providing workers’ compensation insurance varies, depending on the company’s size.

Indeed, some insurers stipulate a minimum policy amount because they find small companies too expensive to service

“The small business market is under-served and over-charged,” says John Swigart, co-founder and CEO of Pie Insurance. “The traditional insurance industry is set up to serve medium-to-large accounts, because they deploy a relatively high-cost human underwriter model and lack digital enablement in the service and distribution, and that doesn’t stack up well with smaller businesses and their policy size. You get a lot of declines in coverage because the business is too small, or the insurer’s ability to assess a business’ risk characteristics efficiently is not there.”

Pie Insurance started selling workers’ compensation policies four years ago, leveraging AI to give small businesses cover.

“We are trying to make their lives better through technology and sophisticated algorithms, driven by different data elements and sources that allow us to efficiently price and underwrite the business,” says Swigart.

With a threatened economic downturn in the States and low unemployment, in-work benefits such as generous health and life cover could be a trump card for small businesses caught up in a talent contest. Their workers’ compensation policies therefore need to be both affordable and as comprehensive as possible.

“The small business market is under-served and overcharged”

John Swigart, Pie Insurance

“Small businesses are more fragile, they don’t have as many cash reserves or the balance sheet that a larger business has to weather this type of environment,” says Swigart. “We insure a lot of service industries – transportation and janitorial businesses, painters and home healthcare workers – and it’s been a challenge during COVID. That said, we had a couple of months of uncertainty, and then we were right back to rapid growth, even while the market overall was still in turmoil. I think that speaks to the need we are filling. We continue to sign new agencies aggressively, and customer growth is doubling every year.”

Making workers’ compensation insurance ‘as easy as Pie’ requires options. The company uses algorithms and AI to manage risk more effectively and faster so that businesses can browse and buy a policy in one day. With this, customers are given a varied choice of payment methods and support, from self-service online portals or a human agent.

Omaha National (ON) is another insurer with a focus on small businesses, working closely with agents and brokers. It provides a full suite of in-house services, including claims adjusting, medical management, and payroll services. Like Pie Insurance, tech is at the forefront of its operations.

“One of Omaha National’s distinctive characteristics is that, even though we are a relatively young company, we design
and develop our software in-house,” says Reagan Pufall, president and CEO. “We focus on developing operational software that supports and elevates the work done by our superb employees.

The main need of the injured worker is a claims adjuster who cares about them, perceives them as an individual with unique needs, and provides them with the support to make it through a difficult experience. As far into the future as I can see, that will no change,” says Pufall. “We are a highly sophisticated tech company, but know that, with workers’ compensation, tech needs to support that relationship, not replace it.”

In time, he says, all the company‘s strategically important work will be performed within its proprietary software application, ONCORE, an all-in-one platform that brings claims handling into a single place for customers to select, adjust and access their insurance.

Our technologies help level the playing field between small and large carriers”

Tom Warden, CLARA Analytics

“Our claim results have always been more favourable than the industry average, but as soon as we launched our ONCORE Claims module during 2021 we saw an immediate, dramatic further improvement.” In that respect ONCORE and CLARA Analytics share a common goal, to scale up the operations and communication processes for workers’ compensation insurance through AI and online solutions.

“Our technologies help level the playing field between small and large carriers, because there are scalable and cost-effective ways to build and implement them for companies of all sizes,” says Tom Warden of CLARA Analytics. “We help smaller carriers further by building their models with their data and data from our contributory database that contains more than four million workers’ compensation and commercial auto claims.”

While AI is a critical part of using data to improve workers’ compensation claim outcomes, the claims data it relies on is notoriously incomplete.

“One reason for this is that loss adjusters are mostly measured on time spent on each claim. They operate in a high-pressure, cost-conscious environment. These pressures lead them to take shortcuts when entering data, and skip many fields which are useful for analytics but not required to advance the claim,” explains Warden.

“Data mapping is extremely important for analytics so that teams creating models and other tools know exactly what data they have, what it means and where it comes from. Productionising these analytics requires accurate data mapping in order to run smoothly.”

Annually, 4.9 million US workers’ compensation claims are filed by both private and government employees, costing a total $100.2billion as of 2021. While there might be a limit to how much they can do to control the number of claims made, employers and insurers are equally interested in reducing their cost.

A survey for Safe Work Australia showed that a positive claims experience resulted in workers reporting for work sooner, while denied claims ultimately cost the industry more. A study by reinsurer Lockton found that 67 per cent of denied claims become paid claims within a year and cost, on average, 55 per cent more than if they had been approved first time.

It’s these costs that predictive AI and algorithmic software such as that deployed by CLARA Analytics, Omaha National and Pie Insurance address.

And, as Kevin Combes, a senior director with insurance giant Aon, acknowledged at a recent IBA Worker’s Comp Power Panel: “I have to say that the proliferation of bespoke and tech solutions are driving significant improvements in efficiency throughout the claims process


This article was published in The Insurtech Magazine #08, Page 41-42

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