Claims Analytics ICBC Advanced Analytics May 2015 Overview

Claims Analytics ICBC Advanced Analytics May 2015

Overview • • • Auto insurance market in British Columbia ICBC’s mandate Limits to pricing segmentation Increasing claims costs What kind of claims analytics 2

Auto insurance market in B. C. Limits / Deductibles Competitive Optional Insurance Market Coverages 3 rd Party Liability Underinsured Motorist Accident Benefits Basic Insurance Monopoly 3

ICBC’s mandate Our business is: Accessible and competitive auto insurance for all British Columbians. There are five core concepts included in this mandate: • Everyone in B. C. has access to insurance; • Our products and services are designed to have wide consumer appeal; • Insurance rates are stable; • Our road safety efforts contribute to reduced crashes and loss; • We provide driver and vehicle licensing and registration services. 4

Limits of pricing segmentation 3. (1). d - “subject to subsection (2) of this section, ensure that universal compulsory automobile insurance rates are not based on age, gender or marital status; ” – B. C. Reg. 307/2004 Special Direction IC 2 to the British Columbia Utilities Commission 5

Profit is a function of price and costs Increase policies in force Reduce fixed costs Price accurately Manage claim costs 6

Loss Cost Loss cost are increasing 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Accident Year Actual (Current Application) PY 2013 Projection (Current Application) 7

Legal Conversion Rate More claimants are seeking lawyers 2004 2005 2006 Actual 2007 2008 2009 2010 Calendar Year 2011 Long Term Trend (2004 -2011) 2012 2013 2014 Forecast 8

Improve value and service for customers Managing increasing BI claims costs. Improve the quality, consistency and timeliness of claims handling. Strategic Decision Support Risk Assessment (Suggested Reserves) Analyze Maintain financial stability Tactical Decision Support Identify Risk Factors Understand Normal Claim Behaviour Measure Case Complexity Fraud Analytics Identify High Risk Providers Review and Revise Implement Benefit ICBC’s claims analytics framework Litigation Management 9

Fraud analytics to detect suspicious claims Legal All Claims Refer to legal for assistance Potential Fraudulent Claims SIU ADJUSTER Fraud suspected and referred Assign and Investigate ADJUSTER Adjuster determines: • How facts are used • Don’t pay claim • Reduce claim payout Facts found Fraud not suspected Case not assigned Fraud not pursued NO ACTION DETERRENCE Fraud Detection Tools Fraud Case Management

Assessing outside counsel effectiveness is critical Who should defend the case? Claimant Adjustor Plaintiff Counsel Defense counsel choices Ms. Fleming, Esq. Mr. Menard, Esq. Claims legal services … Mr. Vavrik, Esq. Claim traits Mr. Yun, Esq. How to evaluate the outcome and the defense counsel performance? 11

Assessing risk is at the core Uncertain Certain Low risk High risk Minor injury Creeping catastrophic injury claim Very low risk Costly but not risky Glass repair Low Catastrophic injury High Future Cost or Impact 12