Talent shortages continue to rank in the top 10 concerns of insurance industry stakeholders.[1] According to the U.S. Census Bureau 12,000 people per day will turn 65 in 2024, calling this milestone “Peak 65.” Peak 65 is expected to lead to talent shortages in the insurance industry.
The U.S. Bureau of Labor Statistics suggests that the industry could lose around 400,000 workers through attrition by 2026. While technology and artificial intelligence can have great impact on the operational and underwriting activity of insurance companies, claims maybe the holdout area where people will continue to be inherently necessary, especially when it comes to workers’ compensation claims. AI is only part of the answer.
Why claims need humans
When employees get injured, it is an inherently personal experience. Injured employees may not know how they will get paid or put food on the table for their family. They are struggling to coordinate medical care, and likely they are in pain and potentially heading down the path of depression. They want and need to talk to a person, a compassionate person—not a chatbot or frustrating electronic answering decision-tree system. When an injured employee does not get a compassionate person on the other end of the phone at the insurance carrier or third-party administrator, he or she could call someone who does care—an attorney who could drive the cost of that claim significantly higher.
Getting a good outcome on a workers’ compensation claim is dependent on the knowledge, experience and tools that are available to the adjusters handling the claim. It takes all three components to manage the claim, and the pending shortage of highly knowledgeable and experienced adjusters is a concern for employers, agents and carriers, as it could lead to rising claim costs.
I had the opportunity to consult with a client on a potential work-related death claim, in which due to the circumstances, the claim was going to be denied. We surveyed multiple adjusters who were handling our claims to choose the right adjuster with the compassion and personality traits to be able to explain to the widow why the claim was being denied and what other avenues she could take to seek reimbursement. We did not choose the adjuster who was handling the claim initially. The conversation went well, and the widow never hired an attorney and she did not challenge the denial.
The wrong communication could have resulted in extensive litigation costs.
The sweet spot for AI
While AI can’t replace the knowledge and experience for how to approach and handle the personal aspects of a workers’ compensation claim, it can be built into the tools available to adjusters to use. Integrating AI algorithms into the claims system to scan the data and identify potential problem claimants, or complex injuries needing complex medical treatment—then leveraging AI assistance to guide and direct an adjuster to available medical resources or even implementing those resources proactively—will help the adjuster to manage the claim. It also will build efficiency on the adjusting team and ultimately curb costs.
How to de-risk carrier/TPA selection
In any request for proposal, it’s important to have a clear understanding of the tools available to the adjusters. The third-party administrator can wow an employer with all the bells and whistles of an employer-facing risk management information system, but then fail to invest in the system that the adjusters use. This makes the adjusters’ job even harder and longer. I recommend that part of the process include sitting at the desk of an adjuster to understand the tools and resources available that make their jobs easier.
In my view, it also is critical to review the use of AI and technology in claims management. A critical question is whether the adjuster has an integrated AI claims mitigation program. The key to look for is that the AI results and guidance requirements are built into the claims system and require action from
the adjuster.
There are two types of AI in claims systems—one that is integrated and another that just sends an email to the adjuster, which the adjuster is not required to act on, and that he or she can ignore. In today’s claims world it is not enough for the AI system to flag a claim red, yellow or green. The AI tool should be interactive with the adjuster—producing real results that are actionable with process and workflow activities, which trigger based upon the result.
For example, AI could review data pertaining to a claim and issue or restrict payments automatically, or request medical records, or assign a nurse case manager or peer review, because the claim was flagged as red. Or AI could scrub the pharmaceutical data to identify medicine overuse or incompatible medicines prescribed in claims, and request peer-to-peer intervention between the pharmacy benefit manager and the treating physician. Using AI to assist and guide adjusters will bring efficiency to their work, and it has the potential to allow adjusters to carry a higher case load.
As the industry faces an impending shortage of claims adjusters, it would be foolish to think we can replace the personal aspect with chatbots and electronic decision trees. Some claims require a personal touch and the knowledge and experience of a seasoned adjuster. Then, we must supplement those skills with technology and AI to bring efficiency to the adjusting process, and improve the process so we can do more with fewer adjusters.
This article originally appeared in the March 2024 issue of PIA Magazine.
Julie Cirillo
Julie Cirillo is the chief risk officer for Engage. She is a seasoned veteran in the workers’ compensation industry, with more than 20 years of experience in workers’ compensation litigation, claims management and risk management. She is a former workers’ compensation defense attorney and has held multiple senior roles in management, claims, loss prevention, risk management and sales. Cirillo earned a Bachelor of Arts from the University of South Carolina-Columbia and a Juris Doctor from the University of Pittsburgh School of Law.
