Traditional reserving methodologies are constrained by their inability to manage more than a very limited set of differentiators.
The Claim Analytics approach applies advanced predictive modeling techniques to determine precise, claimant-specific termination rates. These rates are based on key drivers such as:
- elimination period
- primary and secondary diagnoses (not just diagnostic category)
- benefit level
- change in definition date
- geographic region and
- number of previous claims by the same claimant.
Greater reserving accuracy
This methodology gives reserves for each claimant that reflect that claimant’s true probability of terminating. It provides:
- an improved measure of profitability
- less earnings volatility
- better information for pricing and experience rating.