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The value of web-based claims systems.

Have you identified the most common cause of injury to your organization's employees?

At what point in your company's procedure specifications do these injuries typically occur?

Can you, based on historical trending, estimate number of injuries to the particular body part affected?

As a risk manager, your executive office expects you to know the answers to those questions. But the typical risk manager might respond: "Only from our claim information ... ," "I have no idea!" and " ... maybe a couple hundred, I guess."

Risk managers recognize the value of what is being asked and would answer more thoroughly if they could. The problem comes down to two main issues: the difficulty of obtaining the appropriate data and the difficulty of designing formulas within a report writer that can perform ad hoc projection analysis on historical data.

In recent years, the focus of risk management has evolved beyond cost containment to include cost prevention. After all, the best way to reduce claims costs is to find a way to prevent the claim, which ultimately means identifying and eliminating the cause. Pattern analysis is a necessary step in finding the most prominent causes.

While data mining is often a complex discipline, dependable data patterns can fairly easily be assigned a value based on the ratio of the number of records to the frequency of the data element being investigated. The higher your number of records, the more dependable your frequency ratio becomes.

For instance, if we begin to investigate the most common cause of injuries at an organization, we might start with a common cause of "object placement" based on claim records. Analysis gives us 50 "object placement" causes out of 200 claim records (so a ratio of 1:4). However, these records show only claims and not near misses. If we gathered reports of near misses, we may see a different ratio appear, such as 100 "maintenance" causes over 300 records (1:3). Further, if we look at the "soft" costs associated with the downtime of the employee, the supervisor and the safety manager of the 100 "maintenance" cause records, we may find that those costs are in excess of the claim payments of the original 50 claims associated with the "object placement" cause.

The focus in the first scenario, though based on information associated with the claims, could lead the risk management department to focus on the wrong things for cause prevention or mitigating potential exposure. Hence, the gathering of near-miss data (potentially from safety forms, etc.) as well as claims provides a truer picture of potential problem areas.

But many organizations are still relying on the old paper safety incident forms. While organizations may wish for paperless processes, progress is often compromised by fear of change and worries over the high costs of technological development and training. And risk management departments are often too short-staffed to manually enter the data from these paper forms into a RMIS system.

So how does a risk manager get the information needed to populate a good database on which to generate the pattern data analysis and create accurate reports? Enter: browser- (or web-) based technology and "smart forms."

Web technology is currently the most prevalent platform used for information technology (IT) development. With corporate IT departments constantly facing higher demand for systems support, browser-based technology and applications allow a lower total cost of ownership because the programs are centrally deployed on a web server and accessed through each user's browser (i.e., Microsoft Internet Explorer, Netscape, etc.). Maintenance and upgrades are applied on the server versus each computer having to be touched.

Many organizations have deployed an internal web portal page (or pages), and some allow these pages to be accessible, with the right log-in information, to anyone with a computer and an Internet connection. These corporate portals are an excellent place to put an incident form designed to capture the types of data your organization needs to improve its risk management effectiveness. The information captured by these forms can also serve as the starting point for potential claim information. And yet some organizations still lag behind on using web portal technology for risk and claims management, for various reasons that may or may not be valid.

Reason No.1: My organization does not like change. The individuals who currently complete paper forms are accustomed to them and do not have the time or inclination to learn new ones (even though, in some cases, incidents go unreported due to the complexity or process necessary to complete the forms).

With web technology, existing forms can be delivered to the users' computer screen with little or no change to the actual format, creating a familiar interface. But with web technology, an organization can offer more help transparently by using "smart forms." With smart forms, the user does not have to know exactly which version of the form is appropriate or be an expert on codes or abbreviations to be used because the forms themselves are "intelligent." The system gets answers to a few simple questions and then knows which correct and up-to-date form to present.

Furthermore, the system can make adjustments to queries in the smart form as data is entered, thus focusing information discovery only to what is required. Users do not waste time trying to answer questions that have no bearing. Smart forms can also drive more complete information on the questions that are important. For instance, if the employee safety report has a question asking if the incident involved bodily injury to any person, and the user selects "yes," the form would then ask what body part(s) was/were involved. The options presented can include medical code selections, freeing the user from having to go to external reference documents for codes or abbreviations.

Reason No.2: My organization does not have a large budget for developing this type of data capture.

If your organization is already using portal technology, development for data capture can be augmented by the IT department or done by your RMIS vendor (assuming your vendor has expertise in this technology) relatively inexpensively. Web pages using HTML, JAVA or other languages that transfer the data directly to your already existing RMIS database (through .xml messages, etc.) are significantly much easier and cheaper to design than a complete incident capture database that will then require interfaces built for data transfer to a data warehouse or elsewhere.

Plus, through direct integration of the webpage and your RMIS database, the actual expense associated with designing and implementing the web forms is more than outweighed by:

* The increase in the number of incidents reported due to ease of use

* The increased quality of the data due to the presentation of codes to the end user

* The resulting decrease of causes (and, therefore, potential exposure/claims) due to the increased dependability of the data

Reason No. 3: My organization does not have a large training budget to educate users on a new data capture system.

Browser-based user interfaces are historically easy to use. and with smart forms, users' training is rarely required. A well-designed smart form will guide a user through the completion of information without any manual. Just repeat to any anxious users: 1) "You don't have to figure out what form to use" and 2) "There is no training needed to use the new form ... simply go to the company portal and click Incident Reports."

Next Phase: Sophisticated Reporting

Once the information has been gathered, the output of information becomes just as important. To most of us, "business intelligence" is a fancy way of saying report writing.

In today's risk management world, the risk manager must come up with creative ways to sift through all the data to identify potential risk and report on actual risk experience. This typically begins at an aggregate level and then drives down to specific detail analysis.

The demand for ad hoc report writing is seen in virtually every risk management department today, but the capability is rarely there. Many older report writers provided some ability to alter canned or "standard" reports but were limited to programmed "modifiable" parameters (such as claim type, status, etc.), which does not lend itself to flexible reporting.

Most advanced business intelligence systems today provide the risk manager with an easy-to-use report-generation tool that allows the user to click on any element within the database and drag it onto a real-time report preview screen. The user can change the report from a columnar report to a cross-tab report, drag a graph over the data to produce a chart in real-time and perform drill-down with snapshot capabilities within seconds.

These systems also provide easy methods to input formulas that can be applied to determine report results. The formulas can be designed to produce ratios and even projections on potential loss and exposure based on prior historical experience. The most advanced report writers available today can even make the process seem like fun, at least for a work-related activity.

For risk managers facing hard questions from the executive office, business intelligence reports like this can identify the leading causes of injury, ranked according to dependability of the pattern, in a high-level format linked to the underlying data. More granular information can be available with a simple click of a link.

So, by using today's technology, the process of obtaining accurate, dependable data is simplified allowing risk managers to make appropriate decisions for their business in more a timely fashion.

Web-Based RMIS Helps Control Losses

The Intergovernmental Risk Management Agency (IRMA) began in 1979 as a municipal risk-sharing pool with 14 members. Today, IRMA has 77 members, mostly municipalities in the Chicago suburbs. The Westchester, Illinois-based self-insured organization offers one of the most comprehensive multi-line pool coverage programs anywhere for municipalities.

"Every member gets the same policy because everyone has the same coverage and similar risks and losses," says Laura Vesecky, director of financial services and administration.

IRMA pays out 2,800 claims a year, between $15 and $20 million on auto damage claims, various liability claims and workers compensation claims.

Controlling losses and providing members equitable coverage rule the day for this organization, and staying abreast of risks and claims information is the key. It is a strategy that works despite a challenging environment. Municipalities are high-profile claims targets, and in the post-September 11 era, the cost of insuring police and fire services has risen substantially.

In 2005, IRMA added a business intelligence component to its RMIS, which provides interactive web access to claims and loss reports, database information and other data in a single collaborative environment. "All members can access the Annual Risk Management Report to see how they stack up to other members," Vesecky says. "They're all owners of the organization, so they should know how fellow members are performing." This member-wide perspective creates a pro-active atmosphere. Each member learns to anticipate losses from others' experience and, thus, better control risks.

In IRMA's annual risk management report, the top five causes of accidents and top five body parts for major municipal departments are presented. "We will look at all police departments, for instance, and examine the top causes of car accidents or police accidents," Vesecky says.

That cues loss controllers as to how best to train members. Vesecky also pulls data into Excel to create pivot tables so the loss control team sees where each member's losses come from, a key to future losses. "All of our members are so similar," she says. "Even if a certain member isn't currently having those problems, we will provide some training anyway."

Bill Rachilla is the business solutions manager for CSC's self-insured market solutions. He has more than 15 years of experience with business technology.
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Article Details
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Author:Rachilla, Bill
Publication:Risk Management
Geographic Code:1USA
Date:May 1, 2007
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