2023 Innovation Awards: Advanced Predictive Analytics Consulting Services

Liberty Mutual
Advanced Predictive Analytics Consulting Services

A desire to improve outcomes and better manage risk for commercial policyholders in the workers compensation, general liability and commercial auto sector led Liberty Mutual Insurance Co. to develop its advanced predictive analytics consulting services last year.

The services enable the insurer’s policyholders to better manage risk by developing mitigation strategies to prevent losses before they occur, said Weymouth, Massachusetts-based William Carey, Liberty Mutual’s managing director of client analytics and developer of the services.

Liberty Mutual takes a data science approach, using predictive modeling to aid policyholders and brokers in managing risks proactively.

After conducting statistical screenings, the insurer develops a picture of factors that might contribute to policyholders’ risks.

In one screening, the analysis found that almost 40% of a policyholder’s claims could be addressed by its own policies, company actions and decisions, Mr. Carey said.

“We recognized a need for forward-looking metrics and at the same time businesses were asking for it,” he said. “They’re trying to move beyond that looking-in-the-rearview-mirror approach.”

Mr. Carey said the proactive nature of the program helps the insurer “go deeper” and uncover “what’s actually predictive of success.”

“It’s been a tremendous learning experience to see what are the different factors in different industries that really resonate,” Mr. Carey said.

So far, the predictive analytics program has been successfully used primarily in workers compensation, helping companies understand the link between their employees, operations and outcomes, he said.

For example, it can help identify employee staffing and retention challenges or whether employee turnover is having a significant effect on injury rates, Mr. Carey said.

The program helps companies identify which behaviors are most risky, allowing them to “intervene and take action” upfront, he said.

Given the program relies on data, ideal participants are employers with several years’ worth of claims history, but Liberty Mutual can work with others that are interested in using the service but who may not have extensive data available, Mr. Carey said.

Mr. Carey said it took two to three years of working with larger policyholders to test the services and see how “reproduceable it was for others,” and the general reception among those that have used the service has been positive.

Some policyholders have saved millions of dollars in workers comp costs using the services, he said.