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Predictive analytics helps insurers cut costs, boost profits: Allegient

Many insurance companies possess valuable claims, case, and invoice data from their service providers, such as law firms, independent adjusters, and accountants. But getting at it is another story; most insurers are not using this information to their best advantage because it is too difficult to extract for analysis.

That's where Allegient Systems, a Toronto-based bill review technology firm, comes in. Allegient's Expense and Performance Management software allows companies to access this data and use it as a basis for predictive analytics, the branch of data mining that analyzes current and historical facts to predict future probabilities and trends.

It's one thing for companies to have all this historical information at hand, to tell them how much they spent, where they spent it, and on what types of claims. The next step is to leverage that information, by looking at trends month over month or year over year, to predict what will happen tomorrow. In other words, insurers need to analyze not where they have been, but rather, where they are going so they can act accordingly.

Predictive analytics uses historical data to help insurers by:

• identifying claims likely to be litigated in order to expedite those settlements;
• providing averages to assist with accurate and expedited settlements;
• ensuring that the most capable adjuster is assigned to the file;
• ensuring that the most capable vendor is assigned to the file;
• closing the claim file as quickly as possible – research shows that the longer the claim file is open, the more costly the claim becomes; and
• developing and implementing best practices in claims handling and management.

For example, Allegient's e-billing system can compare cases handled within a particular law firm, or draw comparisons between firms. It can generate reports to compare similar cases handled by different firms, and identify differences in patterns to better control expense spend. The system also enables the user to examine historical field data for both open and closed cases to identify trending patterns with respect to case staffing and billing by activity phase, case duration, timing, and type of disposition.

Let's say a company is using the information provided by the Expense and Performance Management software to examine the fee component of its legal and independent adjusting expenses. It can look at where it was last year, where it is so far this year, and, most importantly, where it will be by year-end if it continues along this path. If the company notes that a particular expense is on the rise, it can analyze that expense on a firm-by-firm basis to see if it is consistent with each firm, and take action to reverse that trend.

Progressive insurers are moving beyond simply reporting what has happened in the past, and are using that information to forecast what will occur in the future. Allegient's software provides its clients with the information they need to make better, more informed decisions that will help them reduce expenses, streamline business processes, and ultimately, improve the bottom line.

For more information, visit www.allegientsystems.com. This is the third in a series of articles. Click here to read our first two articles, "Reining in Runaway Legal Costs" and "How Cost-Effective are Fixed Fees?"

About Allegient Systems

For more than 15 years Allegient Systems has been both the pioneer and leader in providing legal expense and performance management systems and services that maximize the potential and the profitability of professional legal service relationships between law firms and claims organizations. Allegient is the acknowledged market leader in providing vendor management, e-billing and bill review solutions to the insurance industry. With over 50 insurers using the Allegient System to process more than a billion dollars in vendor bills each year, the company continues to experience year over year double digit growth in sales through a disciplined focus on customer service backed by a wealth of insurance industry expertise.

Allegient's web based offering delivers collaboration, efficiency and productivity to the litigation management process by using electronic invoicing, online bill review, budgeting, workflow management and a sophisticated rules engine. Allegient's Business Intelligence capabilities – using Oracle/Hyperion-based query and analytics tools - allow users to access, analyze and share data for the purpose of improving litigation expense, performance and outcome.

Allegient is headquartered in Wilton, CT and has sales and support facilities in Chicago, IL and Toronto, ON. For additional information, please visit www.allegientsystems.com.