Captive Review (CR): What is the current landscape regarding captive EB programmes and data?
Jayesh Patel (JP): As the trend to reinsure EB to captive programmes as a method of EB risk financing has gathered pace in recent years , data has increasingly been thrust into the spotlight. More specifically, how do captive’s utilise the wealth of data generated as a result of setting up these programmes for risk management purposes? It can be argued that the use and control of data and therefore better control over risk has now become as important a factor as the financial benefits, for setting these programs up.
The ability to access more, and more consistent, data has gradually improved within the last 10-15 years, but there's still a way to go. Consistent usage of coding claims in accordance with international standards (ICD 9 and 10 for example) is one such advance which has been helpful in increasing consistency, although there are still some issues around this.
These issues, first of all, are inconsistencies in the way that medical, in particular, and all claims information is recorded at a local level by local insurers. Even within an insurance group such as ourselves, full consistency in claims reporting amongst our vast network is still a work in progress.
There is a further question mark around accessing the required data with regards to data ownership and data privacy. In EB programmes, a local broker often plays a role in supporting the local entity with their claims administration and in some territories such as France and Italy due to way the local programs are set up it can mean they are classed as the “data owner”. As a result, the intermediary “owns” the claims data and therefore controls the claims reporting. As the insurer in this case, we do not have access to the level of data we normally would, and this presents a challenge in terms of turning that into consistent analytics and reporting.
CR: What other factors lead to inconsistency?
JP: Inconsistency in reporting can also come down to local factors, such as statutory reporting requirements and the way in which each insurer is set up to deliver their health reporting programmes. For example, in Turkey and Russia -- two of our major medical markets – we have a strong presence and the corporate medical market is mature, and as a result we get good analytics coming out of these countries.
In other area, such as Africa where medical or EB are still not prominently provided, there are different reporting approaches and methodologies surrounding the way information is reported locally.
The other issue around consistent data is delays. One reason for delays is that you need to issue premium invoices with updated census data on who is being covered, and this can often take a long time to come through the system. On the claims side, too, there are sometimes delays when, for example, you have a large disability claim; there is a period allowed to assess a claim of this type, and this period could take between one and two years in some cases.
CR: Which analytics prove most helpful in controlling ever increasing EB claims costs?
JP: To focus on medical, what you need to do is find trends in the data captured. What are the specific ailments and causes of claim that are driving your claims costs high? One way you can look to identify this is by making sure you have some measure of what the description of the diagnosis is, or what code that ailment falls into so you can start to see some trends.
Once ascertained, trends can begin to be addressed and then you move into the action steps. Regarding analytics, certainly you need to know the causes and the amounts, and this can be the final claim amount, but it could also be the initially presented amount. Analysis around usage of specific hospitals or classes of hospital, within the overall compared to the overall claims cost, can also prove helpful.
Dates are also key, and enable you to identify which year each claim actually fell into. Due to the aforementioned potential for claims delays, you don't always know whether you're paying a claim that was for the current or previous year.
CR: What further actions can be taken in light of this data?
JP: Once trends are identified, it's important to first try and address them country by country. Each country is liable to have unique, specific aspects that are driving claims up.
You may find that muscular skeletosis injuries as a result of work spaces may be a leading cause in one country, and in other territories you might for example have cancer-related claims that could be smoking or lifestyle related.
Therefore, you can begin to look at some prevention methods that could be implemented at a local level. For example, if there are a lot of back injury claims, attention could be paid to the work environment -- is everything fit for purpose? Has an ergonomics test been done locally?
If you’ve identified a large prevalence of cancer claims, possibly linked to lifestyle factors, some smoking cessation or obesity linked trained or education could be implemented.
And of course, as well as the prevention, you could also look at ‘quick wins’. Look at the medical policy itself and ask questions such as: Is it too generous? Is it in line with the market? Is it not generous enough in some areas? Do we have coverage consistency with other medical policies in other countries? Careful scrutiny of these areas can lead to immediate, and sometimes considerable, cost savings.
CR: Are fraudulent claims a problem with employee benefits claims?
JP: They can be. It's important that insurers have good controls in place to ensure the claim being made is valid. We control a lot of our own provider networks within the countries, so have stringent controls and processes in place with our hospitals and clinics and they have to go through certain system checks to be included in our provider networks; this helps us identify if a claim that comes in has been inflated or doctored in some way.
Fraudulent claims can be a particular issue where there are self-insured medical policies that sit outside of captive programmes. In these cases, you essentially have the local business signing off their own staff’s medical claims where they may not necessarily be the required in-house expertise to truly validate the claim.
CR: In what ways could the cost management area develop and improve in future?
JP: It's good that we're getting closer to more consistent data. Our current approach is introducing consistent data parameters for our network via an automated database tool to ensure all of our local insurers can deliver data centrally in the same format on top of their local systems. It also helps that providers are now increasingly looking at what additional services they can offer clients which are linked to prevention of claims. There's a lot that can be done when a claim comes through, but the long-term goal should be to more effectively manage employee health beyond insurance. In order to do that, you need to work on prevention and wellness strategies, and this is something all major life and health insurers including Allianz are currently looking at.
Ultimately, a healthy workforce should result in better claims experience, and therefore a better outcome with regards to premium spend. Ensuring that analytics and action go hand in hand to achieve these aims however continues to be a challenge for EB captive programs.