Using Predictive Analytics for Strategic Planning at Crawford GTS

Predic've  Analy'cs  World,  San  Francisco  

April  16,  2013  

Dr.  Andries  Willemse  –  SVP  Crawford  GTS,  Crawford  &  Company  Sergo  Grigalashvili  –  VP  ICT  ,  Crawford  &  Company  

Crawford  &  Company  

What  is  Global  Technical  Services  SM  (GTS)?    

 v Crawford’s  defini've  offering  to  major  incident  claims  handling,  embracing  catastrophic  and  complex  claims,  high  value  property  and  casualty  claims  as  well  as  specific  claims  such  as  construc'on,  power  and  engineering  

v It  is  the  single  best  global  resource  that  serves  reinsurers,  interna'onal  corporate  market,  major  loss  /  catastrophe  divisions  of  composite  insurers  such  as  the  London  market,  Lloyd’s  syndicates  as  well  as  cap'ves,  risk  managers  and  their  brokers  

v A  unique  combina'on  of  experienced  and  qualified  professionals,  infrastructure  and  leadership  enables  us  to  strategically  manage  losses  anywhere  on  the  globe  

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Crawford  &  Company  

Resource  Management  Challenge  

v  More  than  500  senior  adjusters  and  industry  specialists  opera'ng  out  of  144  loca'ons  worldwide  

v  Serve  12  industry  sectors    

v  Demand  dependent  on  catastrophic  natural  and  man-­‐made  events,  market  condi'ons,  and  individual  professional  rela'ons  

 

 

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Crawford  &  Company  

Focused  Trends,  Seasonality,  Forecasts  

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v Focus  on  an  industry  sector  or  subsector  –  Do we have sufficient expertise in the industry sector to meet the future demand? Recruitment and retention practices, specific industry knowledge, retirement and resignations & cross discipline training

v Focus  on  a  region  or  country  –  Are we under/overstaffed in the region/country to meet the future demand? Business as usual vs CAT type events

v Focus  on  an  insurer  –  Client specific demands in terms of contractual arrangements? Service level agreement compliance

v Focus  on  a  product  or  peril  –  Are our peril-specific processes sufficiently optimal to handle future demand?

v Focus  on  an  adjuster  –  Sufficiently aware of high risks to the organization / opportunities to improve? Improve employee relations; be proactive rather than reactive

Crawford  &  Company  

Approach  

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v Tools  – Proprietary loss data

– Data exploration

– Historic trends

– Forecasts

– Dashboards

v An'cipated  benefits  – Strategic planning

– Capacity-demand analysis

– Improved client relations

Large Loss Data

Adjuster Data

Forecasting

Engine

Strategic  planning   Capacity  /  demand  

Client  analysis  

Economic, Industry

Data

Crawford  &  Company  

Massive  Scale  

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v Three  variables  being  forecast  – Claim count, total reserves, total fees

v For  each  for  the  following  categories  – All claims, catastrophe claims, non catastrophe claims

v For  each  of  the  following  series  – Claims everywhere

– 6 regions

– 12 industries

– 8 product lines

– 40 perils

– 54 industry subsectors

– Top 50 lead insurers

– Top 50 countries

– Top 50 adjusters

– Monthly forecast for the next 18 months; yearly aggregate forecasts through 2015

Crawford  &  Company  

Tools  Used  

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v Crawford  GTS®  proprietary  Global  Large  Loss  Database  

v Published  economic  and  industry  data  

v Available  and  inexpensive  tools  

Large Loss Data

Adjuster Data

Economic, Industry Data

Data  consolida'on,  storage,  management  

Sta's'cal  forecas'ng:  ARIMA,  Holt-­‐Winters,  ETS  

Forecast  model  automa'on;  extended  predic've  modeling  (s'll  work  in  progress)  

Data  visualiza'on  and  explora'on  

Crawford  &  Company  

Step  1:  Understand  Trends,  Seasonality  

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Select any series Trend vs.

seasonal vs. random

Actual trend, linear regression, 95% confidence band

Seasonal averages, and seasonality trend

v Analysis  done  for  Claim  Count,  Reserves  and  Fees  – By region and country, product and peril, industry sector and subsector, insurer, adjuster

– Note: Crawford GTS® book of business, not industry in general

 

Crawford  &  Company  

Step  2:  Forecast  

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80% confidence intervals

Three forecasting techniques

Select any series

v Analysis  done  for  Claim  Count,  Reserves  and  Fees  – By region and country, product and peril, industry sector and subsector, insurer, adjuster

– Note: Crawford GTS® book of business, not industry in general

 

 

Crawford  &  Company  

Where  Will  Growth  Be  ?  Decline  ?  

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v Analysis  done  for  Claim  Count,  Reserves  and  Fees  – By region and country, product and peril, industry sector and subsector, insurer, adjuster

– Note: Crawford GTS® book of business, not industry in general

 

Forecasted increase in flood claims

Forecasted decrease in public liability claims

Crawford  &  Company  

Capacity  Analysis  

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v Forward  looking  analysis  of  capacity  to  meet  the  demand  – Where are the risky areas ? Adjusters close to retirement.

– Where is the adjuster’s book of business concentrated ?

– Analyze by product, insured, geography, industry

Roll Forward

Crawford  &  Company  

Capacity  &  Demand  Predic'on  

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v Forward  looking  analysis  of  capacity  vs.  demand  – When and where we need to hire or train; specific risk areas

– By country and industry sector Supply vs.

demand trend contrast

Forward looking age profile

Crawford  &  Company  

Before  and  A`er  

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Before – reactive After – proactive

Recruit when we see shortage Recruit in anticipation of shortage; customize training based on future demand

React to claims coming in Be prepared based on seasonal factors and overall trends by industry and geography

Analyze impact after a key resource leaves

Analyze risk by looking at resource age profile, geography, industry expertise, product line, and client relationship; mitigate the risk of the resource leaving

Analyze impact after a key client leaves

Analyze risk by looking at client specific profile and forecast; mitigate the risk of the client leaving

Plan and budget based on educated guess and past experience

Use forecast models in conjunction with human judgment

Crawford  &  Company  

Next  Steps  

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v Define  aggregate  metrics  to  further  simplify  consump'on  of  the  forecasts  –  Avoid information overload; highlighting important areas

v Periodically  publish  predic've  analysis  to  help  regional  leadership  –  Break down by country, industry sector and subsector, product and peril, insurer

v Automate  forecast  models  for  weekly  near  term  reforecas'ng  

v Expand  scope  to  include  value,  benefits,  and  profitability  analysis  –  In-house costs vs. external; fixed costs vs. variable; client value metrics; what-if analysis

v Enrich  the  models  with  macro-­‐economic  factors  and  natural  disaster  forecast  

–  GDP growth, premium per capita, insured asses value, industrial production, insurance penetration –  Government forecast of geophysical, meteorological, hydrological, and climatological events

 

 

Crawford  &  Company  

Lessons  Learned  

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v Crawford  GTS®  Large  Loss  Database  –  Leverage the value of proprietary data

v Lessons  learned  –  We all know what happened in the past, focus on the future even if not clear –  Contrary to how it looks, this does not have to be expensive –  Data visualization is extremely helpful –  Focus on the right business objectives and manage change –  There is more randomness in life than we like to think

Thank You !

Dr.  Andries  Willemse  –  andries_willemse@us.crawco.com              Sergo  Grigalashvili  –  sergo_grigalashvili@us.crawco.com