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STD – to – LTD claims conversion prediction

3AI August 15, 2020

Leading USA based Life & Disability insurance company

Problem Statement

  • Most of the short-term disability claims are getting converted to long term disability claims which leads to inappropriate reserving
  • No system to predict the short-term disability claims getting converted to long term disability claims in advance

Analytics Led Approach

Given are high level process steps which were followed

  • Data Pre-processing
  • Logistic Regression Model creation
  • New short-term disability claim
  • Output is going to be wither of the following:
    • Less likely to  get converted  to LTD claim
    • Likely to get converted  to LTD claim

Business Impact

  • A predictive analytical model using Logistic Regression algorithm to identify short term disability claims having high propensity for conversion to long term disability claim was designed
  • Utility mechanism to score the incoming short-term disability claims against the STD – to – LTD Conversion predictive model was created

Critical Success Factors

  • Helps to manage and determine claims reserving more efficiently
  • Identify fraudulent claims earlier in the life cycle of claims
  • Helps to predict the possible duration of a claim and total expected loss and adjustment expenses associated with it
  • Recommend for better nursing care in advance to improve customer centricity and profitability
  • Helps to determine the leave period in advance

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