Leveraging Data…

1. Leveraging Data… To Manage Casualty Total Cost of Risk

2. Introductions • Mike Douglas • FCII, CPCU, ARe, ARM, APA, AIC, ARP, AIC • Chartered Insurer • Director of Business Development • Aon Global Risk Consulting - Philadelphia

3. Leveraging Data - The Opportunity • Loss Costs continue to be the primary driver of Total Cost of Risk (TCOR) in Casualty • Data is the key component in identifying cost drivers and creating more effective and sustainable loss prevention and claims management efforts • Data is more available and accessible than ever: • Increased Utilization and Improved RMIS Systems • Emphasis on Better and More Consistent Reporting

4. Traditional Approach – The very tired “Pie Chart” The Traditional approach to Total Cost of Risk has been on how to “measure” the total costs instead of “managing” the cost drivers…

5. What Lies Beneath! – Typical costs for WC risk – Many are Hidden

6. Using External Benchmarking Data Challenges of Traditional Benchmarking • Right data: • Valuation date • Jurisdiction • Right time • Age of benchmarking sources and data • Right Comparison • Are the companies you benchmark against really comparable to your organization? External Benchmarking May Not Paint an Accurate Picture

7. Re-thinking Benchmarking • Gaining an understanding of the cost drivers: • Identification of Cost-Driving Elements • Benchmarking (Internal and External) • Establishing baselines or KPIs for Processes using your own data • Creating a process of monitoring or Casualty Dashboarding

8. Managing Total Cost of Risk – Simplification Consider the following 12 Cost Driving Elements State Pass- Throughs Premiums Collateral Coverage Medical Strategy Program Structure Prevention Claims Process Information Management Actuarial Disability Management Litigation Management

9. The Next Step - Establishing KPIs The Pieces of the TCOR Puzzle that Drive Your Costs • Leverage carriers, TPAs and brokers for information on each cost-driving element • Examples: • Claims closure rates • Medical-to-indemnity conversion rates • Litigation rates • Percent of medical to total cost • Report lag time • Do an initial assessment of your program

10. Sample Executive Summary Dashboard • An Initial Analysis will: • Establish your own KPIs • Identify areas of focus • Create foundation for dash boarding

11. The Next Step – Casualty Dashboarding • Identify KPIs for measuring ongoing program performance • Measure on a monthly or quarterly basis • More Advanced RMIS Systems can create dashboards with drilldown capabilities

12. Dashboards can Depict Information by Organizational Layer

13. When designed correctly, RMIS Systems can provide Dynamic Analysis of KPIs

14. In Summary • Data remains the key to managing Total Cost of Risk • Traditional outcome-based benchmarking has significant shortcomings • Process benchmarking and establishing KPIs will help direct resources to cost drivers • Leveraging RMIS Systems and dashboarding will result in focused and sustainable management of Total Cost of Risk

15. For Additional Information Please Contact Mike Douglas, Aon Global Risk Consulting Michael.douglas@aon.com Tel: 215 255 1783 Cell: 267 401 0145