Never mind the stats, actuaries need to get talking to their colleagues in claims to understand the people, skills and experience, says Alex Isted
A small and informal (OK, very small and very informal) survey of actuaries found that nearly 40% of them hadn’t seen their claims manager in more than six months.
But despite the small sample size, there is an element of truth in this finding.
To illustrate this point, let us focus on the relationship between actuaries and claims people when managing a book of income protection (IP) claims.
Actuaries should consult with their claims colleagues more often and, if they do not, they are missing a trick or two in best managing their disability portfolios.
Trick 1: This is for the actuary to get to base camp about understanding “What does a claims assessor actually do when assessing a disability claim?” If the answer is: “Well, they pay claims”, then this is well short of the mark.
Claims assessors act as helpers, guides, confidantes and much more to a disability claimant since, among many things, they look to ways to help them back to work as early as possible.
They also look to fund treatments to assist this process, propose ways to adapt the workplace to enable this, and fund retraining into other work. All of this is also aimed at preventing long-term and unprofitable claims.
Trick 2: Does the actuary recognise the skill sets a claims assessor requires? If the reply is:
“They need to know their medicine”, again this undersells the professional skills required of the claims assessor.
To delve into the depths of a disability claim, an assessor will also need to interpret the requirements of the claimant’s occupational duties matched against their level of incapacity.
They will also require financial knowledge when assessing sets of accounts with the self employed and legal nous where claims are disputed.
Often, they will need to be a detective in piecing together all these different elements underlying the claim.
Trick 3: This is to get a sense of how these claims skill sets can help the actuary in their analysis of disability claims portfolios.
Working with the Pricing Actuary
The trends underlying historic disability claims experience can be seen from either a company’s own experience or from CMI (Continuous Morbidity Investigation) data produced by the Institute of Actuaries.
However, the study of this data and the resulting assumptions can be very one-dimensional if it is only the figures that are considered.
Claims input enables pricing actuaries to better understand data based on day-to-day experience rather than simply considering raw statistics.
This can be very effective when considering the way a disability portfolio should be properly priced.