Most workers' comp claim analytics posts I have written were about my search of a good claim analytics package. Unfortunately, my search ended up like my search for workers' comp apps: disappointed with still a hope for the future.

James Moore

Company names have been left off my critiques. My basic point is for the claim analytics field for workers' comp in total.

My review started with a claims analytics package in the 1990s. Yes, a few rehabilitation companies offered workers' comp claims analytics software that was very limited in what it could produce for a claims or risk management department.  

My review of these packages now involves consulting for a few carriers, third-party administrators and mainly self-insured/ large-deductible employers. 

In the 1990s I ran a very large governmental-based TPA operation. The software used had a few modules that actually had a few good variables. 

The variables had to be extrapolated a few times. However, the results were a very basic “yellow flag” on overcharges for certain pharmaceutical concerns. The pharmacy benefit management software covers that well.

This, to me, was not real claim analytics. With an actuarial and statistical background, I hungered for more. I knew it was only a matter of time.   

Now, 20 years later, the search for true workers' comp claim analytics still leaves me wanting. The data is there, but one fault remains.   

The psychological component and healing factors post-injury cannot be drawn on a graph or forecast for any group of claims. Why? No two people are alike, with the butterfly effect driving the statistics. 

I still today challenge any company that has claim analytics to please let me log in or send me a disc for offline software where I could at least have a few good red flags. If you see this article and have workers' comp claim analytics software — please, no beta versions. If your software creates results that are helpful to a claims or risk management department, I will laud your software.  

I have sampled a ton of claims “processing” software with analytics as a backdrop at the National Workers' Compensation and Disability conferences over the years. The claims processing end of most TPA/employer claims packages were beyond excellent.  

The best analytics right now

The best analytics package right now has been sitting at his/her desk, adjusting claims, for years. An experienced and talented claims adjuster usually can predict how a claim turns out long before claims development (five to seven years' experience).  

Why? At five years, an adjuster has seen most claims situations. The adjuster has a claims load of familiar employers. At seven years in the claims business, most, not all,  claims adjusters become “claims whisperers.” They have developed a gut instinct superior to any software of any type of claims reviewer.   

One caveat: The adjuster must have performed a full (no loose ends) investigation into the claim within 48 hours after the injury. If this does not occur, the results will degrade from the start. 

Secret/but not-so-secret software 

Hold on: One work comp claim analytics software product does exist. I use it all the time. The software remains very reliable to date. The 1990s claims processing package used this software successfully for data analytics. 

The answer is: Excel or Open Office.

I have used it as an expert witness on claims lawsuits. Make sure you have the statistics package downloaded into the software. I use Office 365, so the statistics package is automatically included for my use. 

What statistics should you use? The most powerful ones that I use the most are regression for forecasts, and custom sort. Custom sort can be found in the main Excel ribbon.

This blog post is provided by James Moore, AIC, MBA, ChFC, ARM, and is republished with permission from J&L Risk Management Consultants. Visit the full website at www.cutcompcosts.com.