When a life insurance policy goes unclaimed, the benefit may not reach its rightful owner. Verus Financial’s mission is to audit insurers’ data and help beneficiaries gain what they are owed.
Verus Financial worked with Prolifics to deploy IBM Analytics solutions that audit millions of insurance records to detect compliance failures, reveal unclaimed property, and identify beneficiaries.
2 billiondollars of unclaimed property returned to its rightful beneficiaries
99%audit accuracy enables Verus to build strong case for claimants
10xfaster iterative analysis helps increase accuracy and double analysts’ productivity
Business challenge story
Driving better practices in the insurance industry
In recent years, regulators, auditors and insurers in the United States have been working together to reform the life insurance industry’s practices around unclaimed property. In many states, the law states that when a life insurance policy goes unclaimed, the proceeds should be remitted to the state after a “dormancy period” of a certain number of years.
However, in the past, there was a lack of clarity around when the dormancy period should begin, and whether the responsibility for checking the death of the policyholder lay with the insurer, the beneficiary or the state government. As a result, in many cases, billions of dollars of unclaimed funds remained in the hands of insurers for many years, instead of being paid out to the beneficiary or transferred to the state.
Peter Lee, Chief Technology Officer at Verus Financial, explains: “The service we provide is to audit insurance companies and find out whether any mistakes have been made, or any funds are due to be paid out or transferred to beneficiaries or state governments. To do this, we need to detect, identify and follow up on compliance events—which means we need to analyze millions of policy documents and transactions.”
Verus Financial realized that it would be impossible for a business of its size to audit insurance company records manually on such a large scale in the time frames required. It decided to take a smarter approach: harnessing intelligent data standardization and matching technology to accelerate the auditing process.
Peter Lee explains: “Technology is the only cost-effective way to analyze millions of records quickly enough to complete audits in the specified timeframes, which due to contractual agreements and compliance time-limits are often only two or three weeks. To do it manually, we would need hundreds of analysts working round the clock—which neither we nor our clients could afford.”
Deploying an advanced data analytics tool
Verus Financial decided to implement IBM InfoSphere® QualityStage® software to serve as a powerful data standardization and matching engine to help it compare policyholder data from insurers’ records with state-held death records and other third-party sources of data.
To help it optimize the efficiency of the matching process, Verus called in IBM Premier Business Partner Prolifics. Prolifics provided a “health check” for the solution and then worked with Verus to re-engineer some aspects of the process to produce more accurate matches in less time. This also led to the purchase of further software—IBM InfoSphere Information Server for Data Quality—to provide additional capabilities.
Peter Lee comments: “We use the IBM tools for data cleansing, preparation, integration and analysis, enabling us to detect matching records in millions of insurance policies, claims, transactions, contracts and other documents. The solution allows us to dig much deeper than we ever could before, and process the records much more quickly.
“The data we deal with is very varied, from insurance policy data to trading records—it may come from different companies, or from multiple systems within the same company. With the IBM solution we can normalize, standardize and match the data, so that we get a fuller understanding of the lifecycle of each policy, and whether there are any irregularities that suggest that a payout or transfer of funds is required.”
Prolifics made a significant contribution to the project, leveraging accelerators that it has developed to strengthen data quality. To help with user adoption, Prolifics also provided coaching, mentoring and in-depth technical training to the Verus Financial team.
Peter Lee comments: “Prolifics were incredibly responsive and helpful throughout the implementation—they delivered exactly what they say they would. We now see them as an integral part of our business planning and continue to involve them in every technical purchase, every project. It’s a very profitable relationship for us both.”
Going forward, Prolifics will continue to support Verus Financial by acting as a strategic advisor across both current projects and future solutions.
Faster, more accurate analysis
With the new solution in place, Verus Financial’s business has been transformed. Peter Lee notes: “We can claim that our analytics-powered audits are up to 99 percent accurate, compared to an industry average of around 80 to 85 percent for manual audits.”
Furthermore, Verus Financial can now perform around 30 iterations of an analysis per week—approximately ten times more than was possible with a more manual approach.
Peter Lee comments: “The surge in productivity is phenomenal. Without the IBM solutions we either wouldn’t be able to do our job, or we would need to employ far more staff. A single analyst can now do the job of two or three people, because the IBM solution allows us to apply multiple standardizing and matching algorithms to the data almost simultaneously, and let the tools do the heavy lifting.”
This increased productivity and efficiency also has benefits for Verus Financial’s human resources department, as Peter Lee explains:
“The solution makes our analysts’ jobs much easier and lets them focus on more interesting work, which leads to reduced employee turnover. Moreover, it used to take up to 18 months to train an analyst, but with the IBM tools we’re able to cut training down to three or four months, so people can become productive much more quickly.”
The solution also increases the chance of detecting errors and abnormalities in insurers’ data. Due to the sheer scale of the records being analyzed, the risk of a manual auditor overlooking something is high; whereas the analytics-assisted approach helps to find every single needle in the haystack.
The IBM Analytics solution has helped Verus Financial become a more efficient and effective business, and its success is helping state departments and their residents gain access to their rightful property.
“Our work helps a lot of people, especially low income folk,” explains Peter Lee. “Often, someone’s father or grandfather purchased a life insurance policy way back in the 1940’s or 50’s, and their descendants don’t even know that the policy exists. Analytics helps us identify unclaimed properties and ensure that these beneficiaries finally receive the money they are owed. It can be a life-changing experience for them—we’ve heard examples of people who can finally afford the medical care they need, or who have been able to send their kids to college as a result of our investigations.
“In the last five years we have returned about two billion dollars by helping insurance companies identify the rightful beneficiaries. We have also turned over approximately two billion dollars in unclaimed property, which the state government will hold in funds until the rightful owners come forward to claim it.”
He concludes: “Looking back to our business before this project with IBM and Prolifics, the accuracy, the efficiency, and the ability to handle diverse data is night and day. We couldn’t analyze millions of records cost-effectively without analytics, so IBM technology is in a sense the enabler of our entire business—which in turn is helping restore billions of dollars to their rightful owners.”
Founded in 2007, Verus Financial works with US state departments and their residents to audit finance companies and return unclaimed property to its rightful owners. Its customers include 47 of the 50 states, and its efforts to improve practices in the insurance industry have been recognized by the Wall Street Journal and a number of other leading publications. A privately-held company with around 80 employees, it is headquartered in the United States.
- FSS: Insurance - Front Office - Data & Analytics
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For over 35 years, Prolifics has experienced continued growth and recognition for its expertise as a global technology solution provider. Prolifics’ mission is to be a trusted technology partner to its customers, capable of assisting across the entire software development lifecycle. Prolifics helps organizations decrease risk in complex software investments while improving time to market through disciplined project governance and unique technology accelerators. To learn more about services and solutions from Prolifics, please visit prolifics.com.
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