Researchers from the National Council on Compensation Insurance (NCCI) recently released a report explaining how insurance companies are now processing mega claims significantly faster than they have in the past. This is likely due to companies’ use of analytical models to more effectively identify and triage these high dollar claims earlier in the claims process. By processing mega claims more efficiently, companies are successfully increasing the number of claims that they are able to process.
What are mega claims?
“Mega” claims are those predicted to cost an insurance company $3 million or more. Annually, they cost insurance companies around $1 billion to $2 billion but only make up around .04 percent of insurance claims. In 2016 and 2017, researchers noted a significant increase in the number of mega claims being reported. This increase seems to directly correlate with insurance companies processing mega claims more quickly and efficiently
NCCI’s Research
The NCCI’s study includes 4,500 mega claims from 44 states between 2001 and 2018 and breaks the claims down into three major cost categories: claims costing $3-5 million, $5-10 million, and $10 million or more. The study also includes four major injury categories most frequently resulting in mega claims: head/brain, neck/spine, multiple body parts, and all other body parts. Shockingly, most lower-cost mega claims were related to all other body parts category, while those surpassing $10 million were frequently related to the head/brain and the neck/spine.
In the construction sector, specifically, 20 percent of all workers’ compensation claims are mega claims predicted to cost $3 million or more. Of this 20 percent, 37 percent of claims will cost between $3 million and $5 million, 42 percent will cost between $5 million and $10 million, and 46 percent will cost upwards of $10 million.
The Importance of Processing Mega Claims
The main obstacle in processing mega claims, according to the authors of the study, is that they are recognized as mega claims too far along in the process, costing both the policyholder and the company more time and resources. They explain the new analytics models help in processing mega claims by stating that “mega claims are usually not recognized as such when the first unit statistical report is made 18 months after injury. Less than one-half of all claims with $3 million in projected total incurred loss reach that threshold in the first report. But claims with losses between $5 million and $10 million are recognized more quickly.”
On September 11, NCCI will host a webinar to discuss their findings.
Agents
We hope this information on insurance companies processing mega claims is helpful to you.
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Originally from the snow-capped Rockies, Macee moved to Texas in 2016 to pursue an undergraduate degree in Strategic Communication. She currently serves as a writer and editor for Empower Brokerage, as well as the marketing manager for Preferred Senior Advisors. Macee is also working on her Master’s degree in management, and hopes to inspire others with her passion for telling stories through varied digital and print marketing efforts.
