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"Anything that exists exists in a certain quantity and can be measured"

In his famous statement of 1904, Edward L. Thorndike makes the case for measurement in educational instruction and research. However, his truism, is especially relevant today when data from all sources is being used in predictive modeling equations. Perhaps, one of the major challenges is how to adequately quantify human behaviors. For it is precisely this information that will help predict life expectancies, fraud tendencies, not to mention buying/selling tendencies.

Applying Markowitz' Efficient Frontier

It is widely known in the use of Markowitz Efficient Frontier in portfolio "money" mangement' will provide the greatest return for a given amount of risk. It indicates the efficient use of bonds, cash, stocks and other assets in a given portfolio by measuring changes in standard deviation given a certain set of economic indicators.

When constrained by budgets, staffing and "politics", it would be helpful to have an "objective" measure of project value based upon Markowitz' risk/reward technique..particularly when it is widely know that nearly 40% of all IT projects fail to deliver their planned results.

By placing the cumulative business value (discounted cash flows) against available budgets, the curve measures the opportunity of the project(s). It can then be seen that to increase expenditures in a project may only provide limited return, thereby falling off of the efficient frontier. While there are many factors in IT decisions, this approach attempts to eliminate barriers for success and bring commitment to the projects...as all parties can "objectively" understand the IT projects impact on the business model.

Study shows technology improves Loss Costs

It is widely known that what one measures, tends to improve. Yet, as this study illustrates, most insurers measure metrics that produce limited results. However, simple measurements of return to work data show dramatic results.

The Katie School study identifies common points of pain and the advantages that technology brings to carriers, risk managers and TPAs.

'The findings indicated that risk managers, carriers, and TPAs were most concerned with finding technology solutions to address the following top five problems:

1. Controlling Medical costs
2. Managing Return to work
3. Lack of data standards
4. Reserving
5. Performance Measurement

Don't have enough data....try text mining

There is no question that the more data at your disposal coupled with the high quality value of that data allows for an accurate forecast or prediction. However, when dealing with issues that aren't neccessarily reflected in traditional patterns, it may be useful to deal with term extraction or "text mining".

By employing OCR scanning and assigning a weighted value for certain words, the model can score as well as identify recurring words and compute a value to alert claims professionals to patterns or indicators of fradulent activity.

GIGO...

Garbage in...Garbage out....

In today's world of information, it may be nearly impossible to know which set of data can lead you through to anticipate trends in your industry. Clearly, identifying the correct data can help cross sell as well as understand and enhance the sales and operating margins. It can also help you quickly change or adopt new strategies based upon the correlation of data.

First, you need to understand the very basics about data mining and it resultant statistical processes. With software on the market today, you need not become a statistician, but true value comes into play by understanding the application and effects of data mining. It has now become a reality for small to large businesses to bring the power of data to fruition.

Managing Workers' Compensation

Managing Workers' Compensation

Handbook of Occupational Safety & Health, 2nd Edition presents an accessible "how-to" format; even those professionals inexperienced in occupational safety issues can rapidly gain a practical knowledge of the particular concerns of their industry.

This weblog author wrote Chapter 26, Managing Worker's Compensation, a tool-box of advice and counsel on implementing return-to-work programs and measuring their results.

"I solemnly swear to tell the truth": Voice Fraud Detectors

Imagine asking your teenager the following, "Who are going out with tonight?", or "Where will you be going?". Typically the response is "with friends" or "nowhere special", yet you instinctively know that trouble is a-brewing. You can tell by the manner in which they answer.

Intuitively, you know that hestitation means trouble. Reseachers have found that a truthful hesitation is 0.5 seconds, whereas the average hesitation for liars is 1.5 seconds. Technology today can utilize algorithms to meaure this hesitation against a baseline of always true questions.

...a decrease in rate often indicates that the subject is editing information from the account, or fabricating information within the account. Both of these mental activities (editing and fabrication) require time and to buy time, the subject slows down his response rate.

Application Portfolio Management: Best Practices for Project Investment

Faced with dynamic data needs and analysis, competing demands for capital budgets for IT and limited staff expertise, it has become increasingly important to develop a methodology for deciding on which project to undertake and how to implement them. Gartner published a Research Note on one insurance companies approach to identifying the the true costs of an IT project.

Call Center Fraud Detection

Advanced insurers are turning toward more sophisticated methods of fraud detection. It goes without saying the earlier fraud is identified, the sooner aggressive action can be taken against the claimant.

Fraud Detection – First Notice has worked with clients to develop a series of “fraud” questions to be inserted into auto call flows. Based on the answers to those questions and data (e.g., policy inception date) pulled from a client's policy administration system and from 3rd-party sources, First Notice generates a fraud-probability score. If the score exceeds a client’s threshold, it is flagged for SIU or fraud units.

Can Voice Technology Silence Fraud?

The Pursuit Of Predictive Analysis
Detecting claims fraud early in the game--at the prepayment stage--saves insurers not only a lot of pain, but a lot of money.

Fighting fraud is becoming more meaningful to most insurers, research indicates. The Washington, D.C.-based Coalition Against Insurance Fraud (CAIF), for instance, found that 86% of insurers track the percentage of claims

they refer to their SIUs and that 39% refer between one percent to three percent of claims.

"British insurers have had success with VSA," Quigley says. "It's new on the horizon. It functions like a lie detector test, registering stress within a person's voice. It suggests that there might be deception occurring. It's one more tool to refer to an SIU for follow up."

But the downside of VSA is that it's very "Big Brotherish," Quigley adds. "People might consider it an invasion of privacy. And it would not bode well if VSA implicated someone for possibly committing fraud, only later to be found innocent. These are all thing that insurers have to think about when they expand their programs."