2. Exposing Impediments to Insurance Claims Processing
Robert Andrews, Moe Wynn,
Arthur H.M. ter Hofstede,
Jingxin Xu, Kylie Horton,
Paul Taylor, Sue Plunkett-Cole

3. INTRODUCTION

4. Case scenario
Processing injury-compensation claims, such as compulsory third party (CTP) claims, is complex, as it involves negotiations among multiple parties (e.g., claimants, insurers, law firms, health providers).
Despite the relevant legislation mandating milestones for claims processing, the Nominal Defendant sees significant behavioral and performance variations in CTP claims processing, affecting the costs and durations of claims.

5. SITUATION FACED

6. Background
The Motor Accident Insurance Act (1994) provides overarching framework for establishing and managing compensation claims from persons injured in a motor vehicle accident.
The Nominal Defendant, an arm of the Queensland government’s Motor Accident Insurance Commission, determines liability for claims when the vehicle “at fault” is unregistered or unidentified and manages such claims from injured persons.
Schematic of the general CTP claims-management process

7. Challenges
The reasons for variations in claim duration and costs are poorly understood.
The contention is that contextual factors account for the variations
Aims
Identify process-related context factors that affect claim duration
Investigate process differences for cohorts of claims of interest to the ND

8. ACTION TAKEN

9. The Case Study
Process
identification
Domain familiarisation
Focus was on process identification, discovery and analysis phases of BPM Lifecycle
Context data identification
Claims event log preparation
Data quality assessment & log cleaning
Process
discovery
Process modelling
Context modelling
Process
Monitoring
& Controlling
Process
analysis
Performance
Context
Applied process mining methodology and techniques
Process
implementation
Process
redesign

10. The Case Study
Domain familiarization – Researchers familiarized themselves with CTP legislation, existing process models, process-support documentation
Context data set – Guided by literature and interviews with ND staff, a set of process-related context factors were identified for further investigation
Claims data set – Historical records of claims processing (finalized between Sep 2012 and Nov 2015 or lodged after Sep 2012 but not yet finalized)
Data quality and log cleaning – Raw data for both context and claims analyzed for quality issues and cleaned. Many issues were found including missing values, incorrect timestamps, inconsistent activity names, inclusion of irrelevant events and concept drift
Process discovery – Process models in the form of workflow nets were derived
Performance analysis - Various performance measures were derived that relate to overall process performance and comparison of the process performance for cohorts of interest to the ND
Context analysis – Supervised learning techniques were applied to determine context variables that can be used to distinguish between short & long duration and low & high cost claims

11. RESULTS ACHIEVED

12. Claimant has Legal Representation
Comparative Performance Time for claims to reach key process milestones
Claims Involving Unregistered vs. Claims Involving Unidentified Vehicles
14 process milestones identified where there was significant performance variation
Claims involving Unregistered proceeded fast to the point where a liability decision was made
However, from this point on, claims involving Unidentified vehicles proceeded faster to finalization
Key Activity Differences - Unregistered and Unidentified Vehicles
Claimant has Legal Representation
vs. Direct Claims
Clear differences in the average time taken to reach key milestone events
Cohort of direct-claimant claims take less time on average to reach the milestones than does the cohort of legally represented claims
Indicates that the process changes that related to direct claimants had a positive effect on claims-management and process outcomes
Key Activity Differences - Legally Represented & Direct Claimants

13. Context Analysis Identifying factors that impact claim duration and costs
Key indicative factors include
ND engages its own legal counsel
Claimant’s employment status
Whether claimant engages legal representative
Injury severity (particularly whiplash)
Was an Independent Medical Examination required
Claim Costs
Key indicative factors include
Was an Independent Medical Examination required
Duration – Liability to Settlement
Claimant’s age at accident
Injury severity
Claimant’s pre-accident employment type
Claimant’s legal representative has “No win, no fee” policy

14. LESSONS LEARNED

15. Take home lessons …
Process mining techniques and findings (legally represented vs direct claimant) validated the ND’s process improvement initiatives relating to handling direct claims
Key gaps exist in process mining toolset for performing process-performance comparisons across multiple cohorts (of process instances)
Currently requires cohort-at-a-time data preparation and analysis followed by a manual comparison
Consideration of context factors broadens the scope of process modelling beyond simply uncovering sequences and durations of events
Facilitates reasoning about process specifics and provides explanatory (and predictive) capability for process behaviour