Robinson, a principal at CS STARS and the company's in-house analytics and benchmarking expert, said that with the former, you traditionally receive a surface level look at how your claims data in workers' compensation compares to a market segment, the competition, etc. But with the latter, you get rich claims data you can manipulate and manage to make smarter claims decisions.
In other words, it's still benchmarking, but it offers a much deeper dive into the data to come up with effective strategies for claims management. You might call it benchmarking-plus.
"With traditional benchmarking, you can compare your data to a pre-defined set of metrics to get a somewhat valuable comparison with competitors," explained Robinson. "But there can be a more interactive learning approach to benchmarking. The caveat is that this type of more effective benchmarking requires richer, more comprehensive data and the right data mining tools."
Robinson says that more traditional benchmarking results/comparisons for workers' compensation claims are conveyed via static reports delivered relatively infrequently, say annually. With that, you can extract basic metrics and use them for simple comparisons. But today, benchmarking can be transformed into a smarter, more effective weapon in the arsenal required to help keep workers compensation claim costs from rising.
Why the emergence now of this new, richer way to benchmark? According to Robinson, there are several key factors; Access to quality claims data, consistent coding standards and an interactive mining tool tied to your claims. For most industries, the raw data driving published metrics is not available for individual use. Although the final metrics may be accessible, diving in to the detail behind the numbers and calculations is just not possible.
"Different claims data from a variety of sources often do not share the same data definitions," Robinson says. "This can make benchmarking analysis inaccurate."
For this more sophisticated, layered benchmarking to work, the key success factor is access to rich data where there is little or no difference among data element definitions.
CS STARS Claims Benchmarking, part of the company's Risk Management Information Systems (RMIS) platform, helps their clients understand where they stand versus similarly situated organizations, but on a much deeper, more data rich level.
According to Robinson, key features include:
-- A comprehensive claims database with more than fifteen million liability, property and workers' compensation claim records across approximately 500 organizations.
-- Timely updates to data, currently updated quarterly.
-- Ease of use for clients, as a simple toolbar is added to the CS STARS RMIS.
-- An interactive benchmarking report library that allows clients to drill into metrics to uncover issues specific to each client.
-- The ability to select and filter data based on company attributes such as industry, revenue, size, or geography.
-- The ability to select and filter data based on claim attributes such as coverage, loss date range, and state.
As important as the specific product features, is the integrity of the data, Robinson explained. CS STARS has been delivering timely, accurate data to clients for more than 40 years. In addition, CS STARS is the industry's largest provider of risk and claims data conversion, consolidation and aggregation, processing data for more than 800 organizations and from most major insurers and third party administrators.
"The primary idea is to give risk and claims managers the tools they need to measure their claims experience against a large national claims database in order to gauge how it compares to that of similar organizations," Robinson said, adding that the benchmarking data is derived primarily from major insurance companies on behalf of CS STARS clients...
"The key advantage to housing a client's data with the reported benchmarks is that the client can be sure the same criteria apply to both sets of data for each and every report. That way, they know they are always comparing apples to apples. With external benchmarking products, that may not always be the case."
Another important consideration is data standards. Across the insurance industry, there still is not one single, accepted data standard for coding claims, but as part of the conversion process, CS STARS maps claims to a common set of codes that allow us to accurately compare claims from different sources.
"We earn our keep by providing a RMIS to clients, and part of that is converting all the data into CS STARS definitions. It may not be an industry standard, but it means our benchmarking data is extremely accurate..." As a result, he said, clients have an inherent benefit when using CS STARS' RMIS -- they are getting as close as possible to single data standard..
For brokers, the obvious benefits is they can use CS STARS benchmarking to add value to their client contracts.
"Right now, much of the benchmarking we see clients doing is used for internal measurements of year-over-year performance, or east coast vs. west coast, scenarios like that. And if you are just looking for incremental improvement, that's fine," Robinson said. "But today, risk managers and carriers often need to look outside of their organization to verify their results against the bigger picture in order to truly minimize claim costs. They can't afford to have a head in the sand approach."
Robinson said that until now, benchmarking was mainly about comparing two sets of numbers. Benchmarking is now beginning to move to the next level, whereby clients can use those comparisons to try and make changes that lower claims costs.
"Risk and claims managers need to know if they have a problem or not, and if so, how to reduce or eliminate it," he said. "Benchmarking, if done right, can help them achieve that goal."
(The above piece is part of our continuing Perspectives series designed to highlight key products and services to our readers. This paid-for Perspective was written and edited by Risk & Insurance®
on behalf of our marketing partner. Additional Perspectives can be found on our Web site at www.riskandinsurance.com/.)
November 1, 2012
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