Descriptive Analysis- I in Anatomy of Decisions

One of the key Business lines for General Insurance (GI) companies is Healthcare Insurance. These companies provide Health insurance cover to both retail as well as corporate customers (Group Insurance policies).

Each insurance company tracks the claims very closely due to the high propensity of customer filing for a fraudulent claim.  This is an example of a situation where even a good descriptive analysis can prove to be very useful and is usually the first step towards adopting a data-driven decision-making approach. 

Let's hear from Ashish how the insurance companies deal with this issue.

There are a few scenarios where a decision is required to be made after doing the initial data analysis. If the result of initial analysis yields the result that a majority of claims or a disproportionate number of claims are coming from a specific area, hospital, customer etc., then any new claim is subjected to a deeper scrutiny.

Now, if a particular hospital is sending lots of claims then decision that needs to be made is whether the insurer will like to bring the customer in its approved panel in which case there could be a cost or just educate the customer to try and use In-Network hospitals as far as possible.

Also, the company can decide, basis a customer’s claim history to increase his premium at the time of renewal (no claim during the year results in the accumulation of a no claim bonus to your sum assured). All of the above can be achieved with very basic level descriptive analysis and no predictive modelling is required. So these decisions are mostly either intuition based (if data analysis not available) or data based.